Why Nvidia’s $20 billion pact with Groq may be a big deal for employees

Nvidia

Nvidia’s latest move in the AI hardware race has raised eyebrows across Silicon Valley, not just because of its scale but because of who stands to benefit most. The US chip giant has entered into a non-exclusive licensing agreement with Groq, a fast-rising AI inference company, in a deal reportedly valued at around $20 billion. While neither company has disclosed financial specifics, emerging details suggest the agreement could be a major financial win for Groq’s employees and early shareholders.

According to a report by Axios, the licensing arrangement values Groq at roughly $20 billion, despite the startup being valued at $6.9 billion just three months ago. Under the reported structure, most Groq shareholders will receive payments per share based on this new valuation. Around 85 percent of the total amount is expected to be paid upfront, with a further 10 percent scheduled for mid-2026 and the remaining balance by the end of 2026.

The deal goes well beyond shareholders. A large portion of Groq’s workforce is expected to transition to Nvidia as part of the agreement. Groq founder and chief executive officer Jonathan Ross, president Sunny Madra, and close to 90 percent of the company’s employees are reportedly joining Nvidia to help scale and integrate Groq’s inference technology.

For employees making the move, the financial upside could be substantial. The report claims that staff joining Nvidia will receive cash payouts for all their vested Groq shares. Unvested shares will also be honoured at the $20 billion valuation, though these will be paid out in Nvidia stock that vests over time. Around 50 employees are said to be receiving full acceleration of their equity, allowing them to cash out their entire stock packages immediately.

Those who choose to stay behind at Groq are not being left out. Employees remaining with the company will also be paid for vested shares and receive a revised compensation package that includes continued economic participation in Groq’s future. In a notable concession, Groq is reportedly removing the standard one-year vesting cliff for any employee who has been with the company for less than a year, allowing them to receive at least some upfront payout regardless of whether they stay or leave.

In a blog post confirming the agreement, Groq described the partnership as a shared effort to expand access to high-performance, low-cost AI inference. The company said its technology would be licensed to Nvidia, while Groq itself would continue to operate independently. As part of the transition, former chief financial officer Simon Edwards will step into the role of chief executive officer.

Groq also confirmed that GroqCloud, its cloud-based inference platform, will continue operating without interruption. This underscores the unusual nature of the deal. Rather than a full acquisition, Nvidia has opted for a licensing structure that allows it to tap Groq’s technology and talent without triggering the regulatory scrutiny that often accompanies outright takeovers.

Groq is best known for its Language Processing Unit, or LPU, a custom chip designed specifically for AI inference rather than training. Inference is the stage where trained AI models generate outputs, an area where speed, efficiency, and cost increasingly matter. Ross and fellow engineer Douglas Wightman previously worked at Google, where they helped develop the original Tensor Processing Unit, Nvidia’s long-standing rival in specialised AI hardware.

As competition intensifies and antitrust pressure mounts, deals like this may become more common. For Groq employees, the structure offers something rare in today’s market. A chance to benefit from a massive valuation uplift without the company being swallowed outright.