Nvidia’s aggressive expansion in artificial intelligence hardware appears to have reached a new milestone. According to recent reports, the semiconductor giant is acquiring key AI inference technology assets from Groq in a deal valued at $20 billion (approximately ₹1.79 lakh crore). If confirmed, this would become Nvidia’s most expensive transaction to date, underscoring the company’s determination to dominate the next phase of AI computing.

While Groq has publicly acknowledged an agreement with Nvidia, the company has remained deliberately vague about the scope and financial details, referring to it instead as a non-exclusive licensing arrangement. However, industry reports suggest the deal goes far beyond a standard licensing agreement.

Nvidia–Groq Deal: What’s Reportedly Being Acquired

According to a report by CNBC, Nvidia has entered into an all-cash agreement to acquire Groq’s AI inference technology assets. The information was attributed to Alex Davis, CEO of Disruptive, who was also involved in Groq’s recent $750 million funding round.

The reported $20 billion price tag is striking when compared to Groq’s latest valuation of $6.9 billion, at which the company raised fresh capital earlier this year. The premium highlights the strategic importance Nvidia places on low-latency AI inference, an area where Groq has built a strong reputation.

Nvidia’s Biggest Acquisition So Far

If the reported figures are accurate, this transaction would surpass Nvidia’s previous largest acquisition—Mellanox Technologies, which the company acquired for nearly $7 billion in 2019. Both Mellanox and Groq are fabless chip companies, specializing in chip design rather than manufacturing.

The scale of this deal reflects how critical inference performance has become in the AI ecosystem, especially as generative AI moves from training-heavy models to real-time deployment at scale.

Groq Calls It a Licensing Agreement, Not a Full Acquisition

On Christmas Eve, Groq published a newsroom update confirming an agreement with Nvidia. However, the company described it as “a non-exclusive licensing agreement” for its inference technology, stopping short of calling it an acquisition or asset sale.

As part of the agreement:

Groq founder Jonathan Ross, President Sunny Madra, and several team members will join Nvidia

Groq’s cloud platform, GroqCloud, is not included in the deal

GroqCloud will continue operating independently under Simon Edwards, the company’s CFO, who will now take over as CEO

This structure suggests Nvidia is primarily focused on technology, talent, and intellectual property, rather than absorbing Groq as a standalone business.

Why Groq’s AI Inference Technology Matters to Nvidia

Groq is best known for its low-latency AI processors, designed to deliver predictable and extremely fast inference performance. This capability is increasingly critical as AI applications expand into areas such as:

Real-time generative AI

Autonomous systems

Financial trading and risk analysis

AI-powered search and recommendation engines

According to CNBC, Nvidia CEO Jensen Huang believes the integration of Groq’s technology will significantly expand Nvidia’s platform capabilities.

Integration Into Nvidia’s AI Factory Architecture

In an internal email reportedly obtained by CNBC, Jensen Huang stated that Groq’s processors will be integrated into Nvidia’s AI factory architecture. This move is expected to strengthen Nvidia’s ability to support a wide range of AI inference and real-time workloads, complementing its already dominant position in AI training hardware.

Huang reportedly clarified that while Nvidia is licensing Groq’s IP and onboarding its talent, it is not acquiring Groq as a company. This reinforces the idea that the deal is a strategic technology acquisition rather than a corporate takeover.

Strategic Implications for the AI Chip Market

The reported deal highlights several broader trends in the semiconductor and AI industries:

Inference is becoming as important as training in AI deployments

Nvidia is moving to control more layers of the AI hardware stack

Specialized AI chip startups are becoming high-value strategic assets

Talent acquisition is increasingly tied to IP and platform integration

By securing Groq’s inference technology, Nvidia could further strengthen its ecosystem and make it harder for competitors to challenge its end-to-end AI solutions.

What This Means for Groq’s Future

Although Groq is transferring key assets and personnel, the company itself will continue to exist through GroqCloud, focusing on cloud-based AI inference services. Operating independently may allow Groq to remain agile while benefiting indirectly from Nvidia’s broader AI ecosystem.

Conclusion

Nvidia’s reported $20 billion acquisition of Groq’s AI inference assets—whether framed as a purchase or a licensing deal—marks a pivotal moment in the evolution of AI hardware. It signals Nvidia’s intent to dominate not just AI training, but also real-time inference, where performance, latency, and efficiency are becoming decisive competitive factors.

As AI applications move deeper into enterprise, consumer, and real-time environments, this deal could reshape the competitive landscape of AI chips, further cementing Nvidia’s leadership in the global AI semiconductor race.