Nvidia has agreed to purchase Groq, the chip startup founded by Google’s TPU creator, for $20 billion in cash. The deal represents Nvidia’s largest acquisition ever and values Groq at nearly three times its September valuation.
The transaction came together quickly according to Alex Davis, CEO of Disruptive, which led Groq’s latest funding round. His firm has invested more than $500 million in the startup since its founding in 2016.
From Google Side Project to $20 Billion Exit
Groq was founded by Jonathan Ross, who created Google’s Tensor Processing Unit (TPU) as a 20% side project while working on ad optimization. The TPU eventually powered more than half of Google’s compute infrastructure. Ross left Google in 2016 to build what he called a more accessible alternative to traditional GPU architecture.
The startup developed the Language Processing Unit (LPU), a chip designed specifically for running large language models. According to Groq’s benchmarks, the LPU delivers inference speeds up to four times faster than competing GPUs and accelerators.
Rapid Valuation Growth
Just three months ago, Groq raised $750 million at a $6.9 billion valuation. That round attracted major institutional investors including BlackRock, Neuberger Berman, Samsung, and Cisco. The company also secured backing from 1789 Capital, where Donald Trump Jr. serves as a partner.
The acquisition price represents a 190% premium over that September valuation. Groq had been targeting $500 million in revenue for 2024 amid surging demand for inference chips.
Cloud Business Stays Independent
While Nvidia will acquire all of Groq’s chip assets, the company’s cloud business remains separate from the transaction. Groq launched its developer platform, GroqCloud, in February 2024 to provide API access to its LPU infrastructure.
The startup was not actively seeking a buyer when Nvidia approached. Nvidia CFO Colette Kress declined to comment on the deal terms.
Nvidia’s Growing Cash Reserves
Nvidia ended October with $60.6 billion in cash and short-term investments, up from $13.3 billion in early 2023. The company’s previous largest deal was its 2019 acquisition of Israeli chip designer Mellanox for nearly $7 billion.
This acquisition follows Nvidia’s September announcement of plans to invest up to $100 billion in OpenAI, though that deal has not been finalized. The company also committed $5 billion to Intel as part of a separate partnership.
