Nvidia Acquires Groq
Nvidia is literally buying up potential competitors. đ
Hello,
So this was a big win for Saudisâ Sovereign Wealth Fund, and a serious anti-competitive play by Nvidia squashing one of the only legit threats against it. I mean yikes.
Groq an AI chip startup that specializes in inference and speed, represented one of the weaknesses of Nvidiaâs GPUs, so they acquired them so nobody else would. Approximately $20 billion in cash, making it the largest acquisition (or asset purchase) in Nvidiaâs history, far surpassing its $6.9 billion purchase of Mellanox in 2019. Iâd argue this is more defensive than strategic.
Groqâs Sept, 2025 funding was massive, led by Disruptive with significant investment from Blackrock, Neuberger Berman, DTCP and a large US-based West Coast mutual fund manager. The raise also included continued support from Samsung, Cisco, D1, Altimeter, 1789 Capital and Infinitum. $20 Billion is nearly 3 times the $6.9 valuation of just three months ago.
So whatâs going on? The company was founded by creators of Googleâs tensor processing unit, or TPU, which supposedly will compete with Nvidia for artificial intelligence workloads and now Nvidia owns the future of the LPU, and what remains of Groq is basically just a Cloud service that might be a shell company. Their leadership, engineering, key assets, IP, gone.
To call this is a licensing deal is just plain deceptive and to for legal to doge anti-monopolistic scrutiny. Itâs always about speed of integration in reality. Nvidia is a gross monopoly hijacking margins and the cost of GPUs on TSMCâs labor while pocketing the profits in an AI boom where those GPUs are in high demand.
Nvidia is acquiring all of Groq's core assets, intellectual property, and engineering talent via a "non-exclusive licensing agreement." How you can call this an acquire is beyond me. roq will continue to exist as an independent entity under new CEO Simon Edwards, primarily to manage its GroqCloud business, which was not part of the Nvidia purchase. It basically has no future.
Meanwhile the team will continue refining those LLM fast LPUs under Nvidiaâs banner, who already own over 95% of the frontier GPU market. Groq built something Nvidia didn't haveâultra-low-latency processors that can run large language models faster than anything else on the market. Their LPU architecture became the gold standard for real-time AI inference. And frankly, it was one of the only threats to Nvidia out there in existence today on Xmas 2025.
If you own all of my IP, my leadership and engineers, whatâs non-exclusive about it? Nvidia just erased one of its main competitors. Stole their future, for a sum that is at this point almost nothing for Nvidia. Nvidia's total annual revenue for its fiscal year 2025 (which ended January 26, 2025) was $130.5 billion, a 114% increase from the previous fiscal year. Groq has a vibrant and fast growing developer ecosystem, which Nvidia craves for its moat. Groq currently has a developer base of over 2 million developers and teams using its GroqCloud platform. This number has seen significant growth from approximately 356,000 developers earlier in 2025. Now Nvidia has the keys to the castle.
Groq hadnât even released a consumer product yet. Nvidia isnât just buying talent and IP here, Nvidia isn't just buying chips. They're buying time-to-first-token and moat around speed and inference tied to LLMs as they build and push their own open-source models Nemotron 3. Many of their VC armâs investments have been in Open-source AI related startups. Nvidia is thinking long and hard how to secure a better moat with a partnership and developer friendly ecosystem.
The United States seems to think monopoly capitalism is the way to stay ahead of China. With Groq on its side, Nvidia is poised to become even more dominant in chip manufacturing. But is that even a good thing? Jonathan Ross, the founder and current CEO of Groq (though stepping into a new role at Nvidia following a recent deal), was a key figure in the development of Google's Tensor Processing Units (TPUs). Some analysts have been saying TPUs could become a threat to Nvidiaâs market share of GPUs, though thatâs mostly just because of the capacity issues weâre going to see with so much demand.
As tech companies compete to grow their AI capabilities, they need computing power, and Nvidiaâs GPUs have emerged as the industry standard and Groqâs LPUs could enable them to stay on top for a while. They're buying the inference layer before someone else locks it up. If thatâs not anti-competitive I donât know what is while I see people praising the deal as âsmartâ on LinkedIn. But when you have good relations with Trump, what does anti-trust even mean in America any longer? You tell countries you are helping to build their âSovereign AIâ, while forcing them to buy your chips. Your GPUs are years ahead of competitors, so your margins are outrageously high, TSMC tells you they need to increases prices, so you do as well. But letâs not suggest this is good for the world or other countries.
The demand for compute is designed to go up with reasoning models, video, AI agents and future LLM based products ever more compute intensive. So the demand for the GPUs and speed and energy required keeps going up as well. This isnât free market capitalism any longer, itâs something else. You sabotage peer rival nations who are getting too competitive, thatâs not democracy - itâs something else.
Donald Trump Jr. is a partner at 1789 Capital - itâs all in the family business. The deal came together quickly, even suspiciously so. By calling their processor a language processing unit, Groq hit it big. Groq has been working since 2016 on a different type of chip called an LPU (language processing unit). Back before 2016, TPUs were almost like a âmoonshotâ of Google. Now as of 2026, Nvidia and Google will dominate the bulk of the AI market. Another hype trend, another duopoly for the ages. Another America monopoly just made stronger.
According to Robert Quinn, a semi analyst:
âThe message to every other AI chip startup is clear: you're either a partner, an acquisition target, or a competitor about to get outspent.â
So this is the game Nvidia is playing. Politics, Geopolitics and monopoly capitalism at home. For a company that was recently worth $5 Trillion in market cap, itâs daunting how quickly things can change. This is the AI chip equivalent of Facebook acquiring Instagram.
Nvidia is trying to insist that itâs not an acquisition. As Reuters notes itâs a legal hack - This sort of deal follows a familiar pattern in recent years where the world's biggest technology firms pay large sums in deals with promising startups to take their technology and talent but stop short of formally acquiring the target. They pretend they are limited IP acquihires. But Groq dies and Nvidia lives on.
Groq founder Jonathan Ross likely had about 9% equity (guess-estimate) in the company before it got acquired. His net worth likely ballooned to about $3 Billion after this deal. Most founders wonât pass up on that kind of money. But is it good for ecosystem?
