This article first appeared on GuruFocus.
Nvidia (NASDAQ:NVDA) has agreed to a licensing deal with artificial intelligence startup Groq, a move that could extend its technology portfolio as demand for AI computing continues to expand. Under the agreement, Nvidia paid for the right to use Groq’s chip design and plans to integrate the technology into future products, while several Groq executives, including Chief Executive Officer Jonathan Ross, are set to join Nvidia to help advance and scale the licensed technology. Groq said it will continue operating as an independent company under a new chief executive, with no financial terms of the deal disclosed.
Nvidia’s existing technology already dominates data centers at the center of the surge in AI-driven spending, a position that has made it the most valuable company in the chip industry and provided it with substantial resources to reinvest across the AI ecosystem. Groq, founded in 2016, is among a group of startups and large technology companies developing their own AI chips to compete with Nvidia, and raised $750 million at a $6.9 billion post-funding valuation in September to expand its data center capacity. The company said its outsourced computing business will continue, even as its low-latency chip technology is licensed to Nvidia, which said the design could add new capabilities and potentially open new markets.
The licensing agreement fits into Nvidia’s broader strategy of investing across AI infrastructure while seeking to maintain a lead in inference, or running models once they are developed. The company has pledged billions to projects it believes could support wider AI adoption, agreed to invest as much as $100 billion in OpenAI, and taken a stake in Intel, signaling a willingness to work with a wide range of partners as competition intensifies. By incorporating an external chip design alongside its own offerings in hardware, networking, software, and systems, Nvidia appears to be positioning itself to remain central to customers’ AI roadmaps as in-house chip efforts at Google (NASDAQ:GOOG), Microsoft (NASDAQ:MSFT), and Amazon (NASDAQ:AMZN) continue to gain momentum.