Nvidia has just made the biggest deal in its history.

Nvidia has announced it has reached a chip technology licensing agreement with Groq and has also recruited the company's CEO – a former Google executive, according to Reuters.

According to Alex Davis, CEO of the consulting firm Disruptive, Nvidia has reached an agreement to acquire assets from Groq, a company that designs high-performance AI-accelerated chips. Nvidia will own all of Groq's assets except for its cloud computing business. He emphasized that "the deal is being finalized quickly."

Groq specializes in the field of "inference"—the stage where trained artificial intelligence models respond to user requests.

While Nvidia dominates the AI ​​training market, it faces much more intense competition in the inference field, where traditional rivals like AMD and startups like Groq and Cerebras Systems are attempting to challenge its position.

In his most important keynote speech of 2025, CEO Jensen Huang also dedicated a significant portion to asserting that Nvidia can maintain its leading position as the AI ​​market shifts its focus from training to reasoning.

Groq did not disclose the financial terms of the deal. Earlier, CNBC reported that Nvidia had agreed to acquire Groq for $20 billion in cash, making it Nvidia's largest acquisition in history. The previous largest acquisition was worth nearly $7 billion, in 2019, with the acquisition of Israeli chip design company Mellanox.

However, neither Nvidia nor Groq have commented on this information.

Groq announced on its blog that it had "signed an agreement granting Nvidia exclusive rights to use its inference technology," but did not disclose the value of the deal. Under the agreement, founder and CEO Jonathan Ross, along with President Sunny Madra and other senior executives, "will join Nvidia to help develop and expand the licensed technology."

A source close to Nvidia has also confirmed the licensing agreement.

In the blog post, Groq emphasized that the company will continue to operate independently with Simon Edwards as CEO, and the cloud computing business will remain intact.

“The biggest risk appears to lie in antitrust issues. However, structuring the agreement as a non-exclusive licensing agreement could help maintain competition, even if Groq’s management and likely its engineering team switch to Nvidia,” Bernstein analyst Stacy Rasgon wrote in a client report on December 24, shortly after Groq’s announcement.

He also noted that the relationship between Nvidia CEO Jensen Huang and the Trump administration is considered one of the closest among major American technology corporations.

Following a $750 million funding round in September, Groq's valuation more than doubled, from $2.8 billion last August to $6.9 billion.

Groq is one of the few startups that doesn't use external high-bandwidth memory chips, thus avoiding the memory shortage affecting the entire global chip industry. This approach uses a type of on-chip memory called SRAM, which speeds up interaction with chatbots and other AI models, but also limits the size of the models it can serve.