Key Highlights

NVIDIA is set to make its largest-ever acquisition, purchasing nine-year-old chip startup Groq for approximately $20 billion. The company was founded by the team behind Google’s Tensor Processing Unit (TPU), which competes with NVIDIA’s chips in AI computing. In its latest funding round in September, Groq was valued at $6.9 billion.

According to Alex Davis, CEO of Disruptive, which led Groq’s latest funding round in September, NVIDIA has agreed to acquire high-performance AI accelerator chip designer Groq for $20 billion in cash. Davis noted that his firm has invested over $500 million in Groq since its founding in 2016, and the deal progressed rapidly. Three months ago, Groq raised $750 million at a valuation of around $6.9 billion, with investors including BlackRock, Neuberger Berman, Samsung, Cisco, Altimeter Capital, and 1789 Capital—where Donald Trump Jr. is a partner.

Groq is expected to inform investors of the deal later on Wednesday. Davis revealed that the acquisition will cover all of Groq’s assets, excluding its early-stage cloud business.

This will mark NVIDIA’s largest acquisition to date. The chip giant’s previous biggest deal was its $7 billion purchase of Israeli chip designer Mellanox in 2019. As of late October, NVIDIA held $60.6 billion in cash and short-term investments, up sharply from $13.3 billion at the start of 2023.

With surging demand for AI accelerator chips driven by large language model inference tasks, Groq is targeting $500 million in revenue this year. Sources indicate that NVIDIA initiated the talks, while Groq had no prior intention to sell.

Founded in 2016, Groq was co-created by a group of engineers, including current CEO Jonathan Ross. Ross was a key developer of Google’s TPU, a custom chip used by some enterprises as an alternative to NVIDIA’s GPUs.

In late 2016, the company filed its first disclosure with the U.S. Securities and Exchange Commission (SEC), announcing a $10.3 million funding round. The filing listed core founders Ross and entrepreneur Douglas Wightman—a former engineer at Google X’s "moonshot factory."