NVIDIA Corporation (NVDA) Stock: Holds Firm as Chipmaker Strikes $20B Groq Asset Deal

TLDR

• NVDA stock trades around $188.61 at market close.
• NVIDIA agrees to acquire Groq’s AI chip assets for $20 billion.
• The deal is Nvidia’s largest acquisition on record.
• Groq’s leadership and technology will integrate into Nvidia.
• NVIDIA’s long-term stock returns continue to dwarf the S&P 500.

NVIDIA Corporation ($NVDA) stock closed at $188.61 on December 24, down 0.32% on the session, as investors weighed news of the company’s largest acquisition to date.

NVIDIA Corporation, NVDA

The chipmaker has agreed to acquire assets from AI accelerator startup Groq for about $20 billion in cash, marking a major strategic move to deepen its dominance in artificial intelligence inference workloads.

The transaction dwarfs Nvidia’s prior largest deal, the $7 billion acquisition of Mellanox in 2019. With $60.6 billion in cash and short-term investments reported at the end of October, Nvidia has the financial firepower to pursue such a transformative purchase while maintaining balance sheet strength.

Deal Structure and Strategic Rationale

Groq, founded in 2016 by former Google engineers including TPU co-creator Jonathan Ross, designs high-performance AI accelerator chips focused on inference. These chips compete directly with Nvidia’s GPUs in certain AI workloads, particularly where speed and efficiency are critical.

While Nvidia is acquiring Groq’s assets, the transaction has been framed publicly as a non-exclusive licensing agreement for Groq’s inference technology. Groq said Ross, company president Sunny Madra, and other senior leaders will join Nvidia to help scale and advance the licensed technology. Groq will continue to operate as an independent company under its new CEO, Simon Edwards, with the GroqCloud business excluded from the deal.

Alex Davis, CEO of Disruptive, which led Groq’s latest financing, said Nvidia is effectively acquiring all of Groq’s core assets. He noted that the deal came together quickly and was not initiated by Groq as part of a sale process.

Why Groq Matters to Nvidia

Groq has targeted $500 million in revenue this year, driven by booming demand for AI accelerator chips used in inference tasks for large language models. Inference has become a critical battleground as enterprises move from training models to deploying them at scale.

By absorbing Groq’s technology and talent, Nvidia strengthens its position across the full AI lifecycle. The move also neutralizes a potential competitive threat from a startup founded by engineers with deep experience building alternatives to Nvidia hardware.

The deal arrives just three months after Groq raised $750 million at a valuation of $6.9 billion. That funding round included major investors such as BlackRock, Neuberger Berman, Samsung, Cisco, Altimeter, and 1789 Capital.

Competitive Landscape in AI Chips

Groq is not the only AI chip startup to gain traction during the AI boom. Cerebras Systems, another Nvidia challenger, filed for an IPO in late 2024 but withdrew its filing in October after raising over $1 billion privately. Cerebras cited no formal reason for the withdrawal, though disclosures revealed reliance on a single major customer.

These developments highlight the intensity of competition in AI hardware, as well as the capital demands required to challenge Nvidia’s scale and ecosystem. Nvidia’s Groq deal signals a preference to acquire and integrate promising technology rather than face prolonged competition.

Market Performance and Investor Perspective

Despite the massive headline figure, Nvidia shares showed limited volatility, suggesting the market views the transaction as strategically sound. Investors appear comfortable with Nvidia deploying cash to protect and extend its leadership in AI infrastructure.

NVDA’s long-term performance supports that confidence. Year to date, the stock has returned 40.49%, beating the S&P 500’s 17.86%. One-year returns stand at 34.55%, while three-year gains exceed 1,140%. Over five years, Nvidia has delivered returns of more than 1,350%, far outpacing the broader market.

Outlook for NVDA Stock

The Groq asset acquisition reinforces Nvidia’s ambition to dominate AI inference alongside training and networking. Integrating Groq’s technology and leadership could accelerate innovation while limiting competitive risks.

For NVDA stock, near-term movements may hinge on broader market sentiment rather than deal integration concerns. Longer term, the transaction strengthens Nvidia’s strategic moat in AI computing, supporting its case as a cornerstone investment in the artificial intelligence era.

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