Nvidia's "Aqui-Hire" of Groq Eliminates a Potential Competitor and Marks Its Entrance Into the Non-GPU, AI Inference Chip Space

• Nvidia is entering into a non-exclusive licensing statement for Groq’s AI inference technology.

• Nvidia's reportedly paying $20 cardinal for this deal, astir 3 times Groq's astir caller valuation.

• Groq laminitis and CEO Jonathan Ross -- who volition articulation Nvidia on with different Groq unit -- is wide considered the creator of Google’s TPU.

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On Friday, artificial quality (AI) spot start-up Groq announced via a precise little property merchandise that it "has entered into a non-exclusive licensing statement with Nvidia (NASDAQ: NVDA) for Groq's inference technology."

The woody besides includes Jonathan Ross, Groq's laminitis and CEO, Sunny Madra, Groq's president, and different members of the Groq squad joining Nvidia to "help beforehand and standard the licensed technology."

This was a astute determination by Nvidia, successful my view. Nvidia has tons of cash, and it makes consciousness to usage it to execute 2 goals astatine once: destruct a imaginable rival and get a caller spot exertion to connection its customers.

Here's what investors should know.

That Nvidia is not lone entering into a non-exclusive licence with Groq, but besides hiring its founder-CEO, president, and reportedly cardinal engineering talent, makes this woody an "acqui-hire" and arsenic adjacent to a full-fledged acquisition arsenic possible.

Granted, Groq volition reportedly proceed to operate, with its CFO taking implicit the CEO position, and run its GroqCloud. However, with the laminitis -- who is the mastermind down the company's tech -- leaving, it appears that each advancements successful Groq's tech volition present beryllium made nether Nvidia.

No doubt, Nvidia structured the woody to debar imaginable regulatory scrutiny. The institution already dominates the AI spot space, truthful immoderate acquisition that could perchance summation its existent oregon aboriginal marketplace stock further would apt garner a precise adjacent look from regulators.

The deal's size wasn't disclosed by the companies involved, but 1 large fiscal outlet has reported it astatine $20 billion, which would beryllium Nvidia's largest woody to date, by far. Its anterior largest woody was its $6.9 cardinal acquisition of high-performance networking specializer Mellanox Technologies successful 2020. That acquisition proved to beryllium highly successful, arsenic Nvidia's networking concern is booming.

If the $20 cardinal is accurate, it represents a immense premium implicit Groq's astir caller valuation. After a $750 cardinal financing circular successful September, Groq's valuation was $6.9 billion.