Nvidia’s $20 billion deal to acquire key assets and talent from Groq is being viewed by analysts as a strategic move to maintain dominance in the AI chip market, while sidestepping traditional acquisition hurdles. The transaction, structured as a non-exclusive licensing agreement, has raised questions about its true nature, with some calling it a way to preserve the "fiction of competition" amid growing antitrust concerns. The deal, confirmed by Groq in a brief blog post, does not involve a formal press release or regulatory filing from Nvidia, the world’s most valuable company. Instead, Nvidia is relying on Groq’s announcement, which states that founder and CEO Jonathan Ross, president Sunny Madra, and other senior leaders will join Nvidia to help scale the licensed technology. Groq will continue operating as an independent company under new leadership, with finance chief Simon Edwards at the helm. Despite the lack of official documentation, CNBC reported that Groq’s lead investor, Alex Davis of Disruptive, confirmed the $20 billion price tag. The sum would make this by far Nvidia’s largest acquisition in its 32-year history, dwarfing its 2019 purchase of Mellanox for nearly $7 billion. The move follows a broader trend among tech giants like Meta, Google, Microsoft, and Amazon, who have increasingly used talent and technology acquisition through licensing deals to avoid antitrust scrutiny. Nvidia itself has used this approach before, spending over $900 million in September to hire the team and license technology from AI hardware startup Enfabrica. Stacy Rasgon, an analyst at Bernstein, said the structure allows Nvidia to act quickly and decisively, especially in a high-stakes race to control AI infrastructure. “Antitrust would seem to be the primary risk here, though structuring the deal as a non-exclusive license may keep the fiction of competition alive,” he wrote in a client note. He maintains a buy rating on Nvidia with a $275 price target. Nvidia’s stock rose about 1% to $190.53 on Friday, adding to a 42% year-to-date gain and a thirteenfold increase since the end of 2022, when generative AI surged into the mainstream with the launch of OpenAI’s ChatGPT. The company has been using its growing cash reserves—$60.6 billion at the end of October, up from $13.3 billion in early 2023—to invest across the AI ecosystem, including stakes in OpenAI and Intel. Analysts at Cantor Fitzgerald said the Groq deal reflects Nvidia’s dual strategy: expanding its technological lead while neutralizing a potential future rival. “We think this acquisition only enhances Nvidia’s full system stack and overall leadership in the AI market (and only widens its competitive moat),” they wrote, keeping their buy rating and $300 target. BofA Securities echoed the sentiment, calling the move “surprising, expensive but strategic,” and noting that while Nvidia dominates AI training, the fast-growing inference market may require more specialized chips. They also raised key questions: Who owns Groq’s language processing unit IP? Can it be licensed to competitors? And could Groq’s cloud business undercut Nvidia’s own LPU-based services with lower prices? Nvidia has not addressed these details. The first public comment from CEO Jensen Huang is expected on January 5 at CES in Las Vegas.