This article first appeared on GuruFocus.
Nvidia (NVDA, Financials) has agreed to pay nearly $20 billion to license chip technology from the AI firm Groq. This is the biggest transaction Nvidia has made so far to buy anything. The goal of the move is to make Nvidia more competitive in the quickly increasing market for AI hardware and data centers.The business will use Groq’s specialized chip designs in future products and hire Jonathan Ross, the startup’s CEO, and other top engineers. Ross was part of the team that started Google’s own AI chip initiative.The deal is part of a larger wave of investments worth billions of dollars that are changing the AI infrastructure environment. Recently, Microsoft, Oracle, Meta, and Amazon have made big promises to increase their AI processing power and work with companies like OpenAI, Anthropic, and CoreWeave.Analysts argue that Nvidia’s partnership with Groq will help it stay ahead of AMD, Intel, and bespoke chipmakers in the AI accelerator market by giving it access to more technologies. The transaction also supports Nvidia’s plan to improve vertical integration as demand for AI computing keeps going up until 2026.
