TL;DR
Nvidia has agreed to buy Groq, a nine-year-old designer of high-performance AI accelerator chips, for about $20 billion in cash. The deal, reported by an investor CEO, would be Nvidia’s largest acquisition and excludes Groq’s emerging cloud business.
What happened
According to a lead investor’s CEO, Nvidia has struck a deal to purchase Groq, a startup that builds high-performance accelerators for AI workloads, for approximately $20 billion in cash. The acquisition reportedly came together quickly after Groq raised $750 million at about a $6.9 billion valuation in September; investors in that financing included BlackRock, Neuberger Berman, Samsung, Cisco, Altimeter and 1789 Capital. Groq’s cloud offering is not part of the transaction, and the company is expected to notify its investors. Groq — founded in 2016 by engineers including Jonathan Ross and Douglas Wightman — was not actively seeking a sale when Nvidia approached it. The move would eclipse Nvidia’s prior largest purchase (Mellanox, about $7 billion in 2019). Nvidia’s CFO declined to comment, and the report cites Alex Davis, CEO of Disruptive, as the source of the acquisition details.
Why it matters
- A $20 billion cash purchase would be Nvidia’s biggest acquisition to date and signals significant consolidation in AI hardware.
- Groq was founded by engineers involved in Google’s TPU, so the deal brings complementary chip design expertise into Nvidia’s portfolio.
- Nvidia’s large cash reserves give it capacity for major strategic purchases that can reshape competition in AI accelerators.
- Excluding Groq’s cloud business suggests Nvidia is focused on acquiring chip and hardware IP rather than the startup’s nascent cloud operations.
Key facts
- Deal amount reported at about $20 billion in cash.
- Groq was founded in 2016; founders include Jonathan Ross and Douglas Wightman.
- Groq raised $750 million in September at an approximate $6.9 billion valuation.
- Investors in that round included BlackRock, Neuberger Berman, Samsung, Cisco, Altimeter and 1789 Capital.
- Groq’s cloud business is explicitly excluded from the acquisition.
- Groq had been targeting roughly $500 million in revenue this year, per the report.
- Nvidia’s previous largest acquisition was Mellanox for nearly $7 billion in 2019.
- Nvidia had about $60.6 billion in cash and short-term investments at the end of October, up from $13.3 billion earlier in 2023.
- Source attribution: Alex Davis, CEO of Disruptive, which led Groq’s recent financing; Nvidia’s CFO declined comment.
What to watch next
- Whether the transaction will require regulatory approval or face antitrust review: not confirmed in the source.
- How Nvidia plans to integrate Groq’s engineering teams and chip designs into its product roadmap: not confirmed in the source.
- What becomes of Groq’s cloud business after being excluded from the sale; the source says the cloud business is not part of the transaction.
Quick glossary
- AI accelerator chips: Specialized processors designed to speed up machine learning tasks such as model training and inference.
- Tensor Processing Unit (TPU): A type of custom accelerator originally developed at Google to handle large-scale machine learning workloads.
- Inference: The process of running a trained machine learning model to generate predictions or outputs from input data.
- Valuation: An estimate of a company’s worth, often derived from amounts investors pay during funding rounds.
- Acquisition: A transaction in which one company purchases most or all of another company’s shares or assets.
Reader FAQ
Has Nvidia confirmed the acquisition?
Nvidia’s CFO declined to comment; the acquisition report was attributed to Alex Davis of Disruptive.
Is Groq’s cloud business included in the sale?
No. The report states Groq’s nascent cloud business is not part of the transaction.
What was Groq’s recent valuation and fundraising?
Groq raised $750 million in September at an approximate $6.9 billion valuation.
Was Groq seeking a sale prior to the approach?
The report says Groq was not pursuing a sale when Nvidia approached it.
TECH Exclusive: Nvidia buying AI chip startup Groq for about $20 billion in its largest acquisition on record PUBLISHED WED, DEC 24 20253:54 PM ESTUPDATED 28 MIN AGO David Faber…
Sources
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