How $20 billion Nvidia deal may also mean ‘large win’ for Groq employees

Nvidia announced a “non-exclusive licensing agreement” with AI chipcreating startup Groq last week. Groq employees and shareholders are expected to receive substantial payouts from this deal with the US chipcreater, which is reportedly worth around $20 billion. However, no equity or ownership of the shares is being transferred in the agreement. Meanwhile, neither Nvidia nor Groq has disclosed the financial details of the licensing deal.

According to a report by Axios, sources have claimed that most Groq shareholders will receive payments per share based on the $20 billion valuation. About 85% of the fee will be built upfront, with another 10% paid in mid-2026 and the remaining amount at the conclude of 2026. Apart from shareholders, Groq employees who are joining Nvidia will also be paid handsomely, the report suggests.

Groq’s founder and chief executive officer (CEO), Jonathan Ross, and president, Sunny Madra, along with 90% of the startup’s employees, will reportedly join Nvidia. Meanwhile, Groq would continue to operate as a standalone company led by new CEO Simon Edwards, who had been the startup’s chief financial officer (CFO).

The report claims that Groq employees who join Nvidia will receive cash for all their vested shares. Their unvested shares will be paid out at the $20 billion valuation, but through Nvidia stock that vests over time.

About 50 employees in this group will have their entire stock packages accelerated and paid out in cash. Employees who remain at Groq will also be paid for their vested shares and will receive a package that includes economic participation in the ongoing company.

Any Groq employee, whether staying or leaving, who has been with the company for less than one year will have their vesting cliff rerelocated. This will allow them to receive some upfront payment.

What Groq stated about its deal with Nvidia

In a blog post, Groq wrote: “Groq announced that it has entered into a non-exclusive licensing agreement with Nvidia for Groq’s inference technology. The agreement reflects a shared focus on expanding access to high-performance, low-cost inference.

As part of this agreement, Jonathan Ross, Groq’s Founder, Sunny Madra, Groq’s President, and other members of the Groq team will join Nvidia to assist advance and scale the licensed technology.

Groq will continue to operate as an indepconcludeent company with Simon Edwards stepping into the role of Chief Executive Officer.

GroqCloud will continue to operate without interruption.”

Even though many employees are relocating to Nvidia, the AI hardware startup will continue to operate indepconcludeently. This is becaapply the deal is only a licensing partnership, not a complete acquisition. This unusual structure is becoming increasingly common among AI majors seeking to avoid antitrust problems.

Groq is known for its Language Processing Unit (LPU), a custom AI inference chip. This is the process where trained AI models create predictions or decisions. The startup was valued at $6.9 billion just three months ago and raised $750 million in its latest funding round.

The startup’s founder, Jonathan Ross, and engineer Douglas Wightman previously worked at Google, where they assisted develop the company’s first Tensor Processing Unit (TPU). TPUs are special chips that compete with Nvidia’s GPUs for running large-scale machine learning tquestions.