Nvidia has taken a strategic step to consolidate its leadership in artificial intelligence by entering into a key technology licensing agreement with AI chip startup Groq. The move, structured to avoid a full acquisition, grants Nvidia access to specialized inference technology and critical engineering talent while sidestepping potential regulatory scrutiny. This development highlights Nvidia’s focused effort to expand its footprint in the competitive AI inference market.
A Strategic Licensing Framework
Rather than pursuing a traditional buyout, Nvidia has secured a non-exclusive license to Groq’s inference technology. Concurrently, the chip giant is onboarding several of Groq’s key personnel. The specific terms of the arrangement include:
- Groq founder Jonathan Ross, who played a significant role in developing Google’s Tensor Processing Unit (TPU), will join Nvidia.
- President Sunny Madra and core members of the engineering team are also making the transition to Nvidia.
- Groq will continue to operate as an independent company under new CEO Simon Edwards.
- The agreement does not include Groq’s cloud business.
- The license is non-exclusive, allowing Groq to continue serving other clients.
While initial media reports suggested a deal valuation of approximately $20 billion, neither company has confirmed this figure. This structure provides Nvidia with a clear advantage: it gains valuable intellectual property and human capital without the antitrust complications that could accompany a complete merger.
Groq’s technological approach utilizes SRAM memory integrated directly onto the chip, as opposed to external High-Bandwidth Memory modules. This design can accelerate interactions for chatbots and AI models, though it may impose limitations on the size of models it can support.
Inference Market Takes Center Stage
Nvidia’s dominance in training large AI models with its Data Center GPUs is well-established. However, the inference segment—the execution of already-trained models—faces more intense competition from rivals like AMD and startups such as Cerebras Systems.
CEO Jensen Huang has emphasized throughout 2025 that Nvidia intends to maintain its leadership even as industry growth increasingly shifts from training to inference. The Groq partnership directly supports this strategic priority.
Expansion Backed by Record Financials
This deal follows Nvidia’s announcement of exceptionally strong results for the third quarter of its fiscal 2026, released in November. The company reported record-breaking figures:
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- Record revenue of $57.0 billion, representing a 62% year-over-year increase.
- Data Center revenue reached $51.2 billion, up 66% from the prior year.
- GAAP earnings per share came in at $1.30.
- The company issued Q4 FY2026 revenue guidance of $65.0 billion.
The Blackwell GPU architecture remains a primary growth driver. Huang noted that Blackwell sales are “far exceeding expectations” and that Cloud GPUs are sold out.
Wall Street Maintains Bullish Outlook
Sentiment among market analysts remains overwhelmingly positive. Approximately 91% of the 70 analysts covering the stock maintain a “Buy” recommendation. Several firms have recently raised their price targets:
- KeyCorp increased its target from $250 to $275.
- Arete Research lifted its target from $244 to $261.
- Cantor Fitzgerald established a $300 price target.
- Wells Fargo maintains an “Overweight” rating with a $265 target.
The current average price target stands at $262.14, indicating further potential upside from recent trading levels.
Navigating the Regulatory Landscape
The Groq agreement is part of a broader trend where major technology firms secure talent and technology through partnerships rather than outright acquisitions. Similar examples include Microsoft’s hiring of personnel from Inflection AI, Meta’s investment in Scale AI, and Amazon’s recruitment of founders from Adept AI.
Bernstein analyst Stacy Rasgon acknowledges that antitrust risks persist in principle. However, he suggests that the non-exclusive nature of the license could help preserve formal market competition. Rasgon also highlighted Nvidia’s reportedly strong relationship with the prospective US administration under Donald Trump as a potential mitigating factor.
Upcoming Catalysts on the Horizon
Investors can anticipate several near-term events. Nvidia is scheduled to make further AI hardware and software announcements at CES 2026 in January. Subsequently, on February 25, 2026, the company will release its fourth-quarter FY2026 results, which should provide deeper insight into demand for Blackwell GPUs and the momentum within the inference business.
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