Nvidia buys AI chip startup Groq for $20 billion

Nvidia has agreed to buy Groq, which develops high-performance gas pedals for artificial intelligence, for $20 billion. The announcement was made by Alex Davies, head of investment firm Disruptive, which led the startup’s latest round of funding in September.

Alex Davies, head of investment firm Disruptive, which led the startup’s latest round of funding, said.

Davis said the deal was agreed fairly quickly. Just three months ago, Groq raised $750 million at a valuation of about $6.9 billion. That investment round included BlackRock, Neuberger Berman, as well as Samsung, Cisco, Altimeter, and 1789 Capital, where Donald Trump Jr. is a partner.

The round was led by a combination of BlackRock, Neuberger Berman, and Samsung, Cisco, Altimeter, and 1789 Capital, where Donald Trump Jr.

Groq is expected to notify its investors of the deal at a later date. The acquisition includes all of the company’s assets, but its cloud business Groq Cloud is not included in the deal.

For Nvidia, this will be its largest acquisition ever. Previously, the company’s biggest deal was its 2019 purchase of Israeli chip developer Mellanox for about $7 billion. At the end of October, Nvidia had $60.6 billion in cash and short-term investments, compared with $13.3 billion at the start of 2023.

Groq had hoped to reach $500 million in revenue this year amid a surge in demand for AI gas pedals used to speed up inferencing in large language models. The company wasn’t looking for a buyer or planning a sale when it was approached by Nvidia.

And the company was not looking for a buyer or planning a sale when it was approached by Nvidia.

Nvidia chief financial officer Colette Kress declined to comment on the deal.

Groq was founded in 2016 by a group of former engineers, including CEO Jonathan Ross. Ross was previously involved in the development of TPU — Google’s specialized processor, which is used by a number of companies as an alternative to Nvidia’s graphics gas pedals.

Groq’s CEO, Colette Kress, said the company’s board of directors was not interested in the deal.

In an initial SEC filing in late 2016 while raising $10.3 million, Ross and Douglas Whiteman — an entrepreneur and former Google X lab engineer — were listed among the company’s key individuals.

With cash reserves on the rise, Nvidia is aggressively ramping up investments in startups and infrastructure around AI. The company has already invested in AI and energy infrastructure startup Crusoe, AI modeling developer Cohere, and increased its investment in CoreWeave ahead of that cloud company going public.

In September, Nvidia said it would invest up to $100 billion in OpenAI, provided the startup uses at least 10 gigawatts of Nvidia products. A formal agreement between the parties has yet to be announced. In the same month, Nvidia announced plans to invest $5 billion in Intel as part of a strategic partnership.

Nvidia also announced plans to invest $5 billion in Intel as part of a strategic partnership.