Nvidia and Groq: A Shortcut to SRAM Powered Inference

The Christmas Eve Pivot

On Dec. 24, the market was primed for a blockbuster: CNBC reported $NVIDIA(NVDA)$   was closing in on a $20B all-cash buyout of AI chip unicorn Groq. Hours later, the narrative flipped. The acquisition vanished, replaced by a surgical "licensing + hiring" deal.

The Reality: Nvidia isn't buying Groq. Instead, they are absorbing Groq's founder Jonathan Ross, President Sunny Madra, and key technical staff. Groq remains an independent entity under new CEO Simon Edwards.

The Strategy: The "Car Engine" ManeuverMake no mistake—the shape of this deal is the point.Licensing IP and poaching leadership is the corporate equivalent of taking the engine out of a rival car without buying the whole garage.

~Faster: No months of due diligence.

~Cleaner: No messy integration of back-office overhead.

~Quieter: A full acquisition invites an antitrust brawl. A licensing deal? That flies under the radar while achieving the same goal: neutralizing a competitor and securing talent.

The Cold Shower for the "Non-GPU" Trio

Groq, along with SambaNova and Cerebras, represents the "Inference Resistance"—ambitious attempts to reimagine AI hardware. Groq's bet was on-chip SRAM (speed/predictability) over external HBM (capacity).

But let's look at the funding reality. This deal is a cold shower for investors hoping for a fairy tale where every "faster than GPU" pitch becomes a public market darling. The road is sharp and full of glass. $Intel (INTC.US)$ is in advanced talks with SambaNova around $1.6B including debt and signed a nonbinding term sheet, so not a done deal yet.

Why Nvidia Wants a Second Lane

Why did Jensen Huang make this move? Three reasons with Wall Street logic:

Owning the "Metabolism" of AI. Training is the flashy gym session; Inference is the daily metabolism. It's where the volume lives. Even if Nvidia owns training, they cannot ignore architectures that promise lower latency per query. Absorbing Groq's talent helps Nvidia tune its own inference stack without breaking its ecosystem. It's adding a specialist instrument to the orchestra, not replacing the symphony.

A Competitive Hedge with Options. A non-exclusive license is a low-risk bet. If Groq's IP maps to Nvidia's vision? Great. If not? They haven't swallowed a whole company. Crucially, by hiring the leadership, Nvidia ensures Groq doesn't become a weapon in a competitor's hands (looking at you, $Advanced Micro Devices(AMD)$   or hyperscalers).

The Antitrust "Invisibility Cloak". A $20B merger lights up the DOJ's radar immediately. A talent-hire and licensing deal is much harder to block. It allows Nvidia to signal that it wants to own the "default" highway, while quietly taking control of the on-ramps.

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