Nvidia-Groq deal keeps fiction of competition alive: analyst says
Nvidia founder and CEO Jensen Huang watches U.S. President Donald Trump speak at the U.S.-Saudi Investment Forum at the John F. Kennedy Center for the Performing Arts in Washington, DC on November 19, 2025.
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It’s been two days since that news came out. Nvidia It was spending $20 billion to acquire top talent from Groq in what the chip startup called a “non-exclusive licensing agreement.”
Nvidia, the world’s most valuable company, has not issued a press release or regulatory filing and is only verifying Groq’s 90-word content, according to a spokesperson blog post It was released after the close of holiday-shortened trading on Wednesday.
“They’re so big now that they can make a $20 billion deal on Christmas Eve without any press release and without anyone batting an eyelid,” Stacy Rasgon, a Bernstein analyst, said in an interview on CNBC’s “Squawk on the Street” on Friday.
Although neither company would confirm the price tag, CNBC learned Wednesday from Groq’s lead investor Alex Davis that Nvidia has agreed to buy assets from Groq, a designer of high-performance AI accelerator chips, for $20 billion in cash. Davis’s firm, Disruptive, invested more than half a billion dollars in Groq and led the initiative. last funding round At a valuation of $6.9 billion in September.
Groq founder and CEO Jonathan Ross said the company’s president Sunny Madra and other senior leaders “will join Nvidia to help advance and scale the licensed technology,” adding that the startup will continue as an “independent company” led by chief financial officer Simon Edwards.
As an acquisition, Groq would be by far Nvidia’s largest in its 32-year history. Its previous largest acquisition came in 2019, when Nvidia acquired Israeli chip designer Mellanox for close to $7 billion.
But Nvidia is instead following the tactics other tech giants have used over the past few years, spending billions of dollars to hire top AI talent and gain access to key technologies through licensing deals.
It is a strategy used by. Meta, Google, Microsoft And Amazon. Nvidia has used this tactic before, spending more than $900 million in September to hire Enfabrica CEO Rochan Sankar and other employees at the artificial intelligence hardware startup and license the company’s technology, CNBC reported.
By avoiding traditional acquisitions, tech companies have been able to evade a certain level of antitrust scrutiny and close deals quickly to attract the people they most covet.
“Antrust appears to be the primary risk here, but structuring the deal as a non-exclusive license could keep the competitive fiction alive,” Rasgon wrote in a note to clients on Thursday. His firm recommends buying Nvidia shares and has a $275 price target on the stock.
Shares of Nvidia rose nearly 2% to $192.40 on Friday. The stock is up 43% this year and is up thirteenfold since the end of 2022, when generative AI took off following the launch of OpenAI’s ChatGPT.
Nvidia is using its expanding cash pile to invest capital in its AI ecosystem, including recent investments in OpenAI and Intel. At the end of October, Nvidia’s cash and short-term investments increased from $13.3 billion to $60.6 billion at the beginning of 2023.
We are widening the ‘competitive moat’
The startup’s expertise is in the inference side of the market, which means using artificial intelligence to make decisions based on new information. Nvidia dominates the education part of the market, which involves teaching AI models to learn from patterns in large amounts of data.
Analysts at Cantor said in a report published Friday that Nvidia was “playing both offense and defense” by seizing Groq’s assets, potentially preventing them from falling into the hands of a competitor.
“We think this acquisition will only enhance Nvidia’s entire system stack and overall leadership in the AI market (and will only increase its competitiveness),” wrote the analysts, who maintained their buy rating and $300 price target.
BofA Securities analysts also maintained their buy recommendation and $275 target following the announcement. In a note on Friday, they called the deal “surprising, expensive but strategic” and said it showed Nvidia acknowledging that “while GPUs will dominate AI training, the rapid move toward inference may require more specialized chips.”
Key questions remain, analysts said, such as who will own Groq’s language processing unit intellectual property, whether it could be licensed to Nvidia rivals, and whether what’s left of Groq — its nascent cloud business — could possibly “undercut NVDA’s LPU-based service with lower pricing.”
Nvidia isn’t commenting on any of these details for now. The first opportunity analysts and investors will get to hear from the company will be January 5, when CEO Jensen Huang is scheduled to appear. speaking at CES In Las Vegas.
— CNBC’s David Faber contributed to this report
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