Greetings,

Nvidia has spent the last few years cementing its status as the world's most valuable company, but its latest move shows that even a dominant leader can't afford to be complacent.

Wayne Ma, Miles Kruppa, Valida Pau, and Katie Roof report on a massive, $20 billion deal where Nvidia is licensing technology from Groq—one of its most well-funded challengers—and hiring its top leadership. It's a stunning figure, especially considering it's about three times the valuation Groq fetched in a financing round just a few months ago.

What's fascinating here isn't just the price tag, but the "quasi-acquisition" structure. By opting for a nonexclusive licensing deal rather than a formal takeover, Nvidia is following a playbook recently used by Microsoft and Google to absorb talent and IP while attempting to steer clear of the regulatory microscope.

Why it caught my eye:

• Inference Specialization: Groq's technology aims to run AI applications faster and more cheaply than Nvidia's general-purpose GPUs.
• Architecture Differences: Groq chips use Static Random-Access Memory (SRAM) to process data on the chip itself, reducing reliance on the high-bandwidth memory supply chain.
• Market Pressures: Despite raising $1.8 billion, Groq recently cut its 2025 revenue projections by 75% as it struggled to break Nvidia's grip on data center providers.

This deal is a clear signal that the race for AI dominance is moving past raw power and into the realm of efficiency and specialized silicon.

Best,

Jessica Lessin
Founder & Editor-in-Chief

Why Nvidia Struck a $20 Billion Megadeal with Groq

Nvidia stunned Silicon Valley on Wednesday by agreeing to pay about $20 billion to license technology from Groq, one of the best-funded startups trying to challenge Nvidia's dominance in chips for powering AI applications, known as inference computing, according to a person involved in the deal. Nvidia is also hiring Groq's founders and other leaders, according to the startup, which didn't disclose the financial details.

It isn't clear whether the $20 billion figure includes future payouts from Nvidia based on performance milestones involving the Groq hires. Still, it is about three times Groq's $6.9 billion valuation in a financing just a few months ago.