NVIDIA Corp. (NASDAQ:NVDA) made a key move on Wednesday to secure its dominance in the AI inference market through a non-exclusive licensing agreement with Groq.
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Analysts at Rosenblatt Securities view the deal as a critical maneuver to counter competition from Alphabet, Inc. (NASDAQ:GOOGL) (NASDAQ:GOOG) Google‘s tensor processing unit (TPU) and solidify Nvidia’s market leadership as the AI industry shifts focus from training massive models to real-time deployment.
Nvidia’s stock climbed on Friday as investors and Wall Street signaled approval of the strategic deal.
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Talent and Technology Infusion
At the heart of the agreement is a massive transfer of high-level talent. Jonathan Ross, Groq’s founder and the original architect of Google’s TPU program, will join NVIDIA alongside Groq’s president, Sunny Madra, and other key team members to scale the licensed technology.
Groq will continue to operate as an independent entity under new CEO Simon Edwards, and Nvidia gains access to Groq’s specialized language processing unit (LPU) technology.
The LPU technology is optimized for high-performance, low-cost inference. The upcoming LPU V2 is expected to move to Samsung‘s 4nm process, delivering an order of magnitude higher performance and significant power efficiency gains.
Defending the Competitive Moat
Rosenblatt points to the choice of a licensing structure rather than an outright acquisition as a calculated move to avoid the regulatory scrutiny facing other Big Tech mergers.
The licensing strategy mirrors a similar move in September 2025, when Nvidia executed a $900 million deal with Enfabrica to bolster its networking infrastructure.
Nvidia effectively neutralizes a rising competitor while expanding its technical capabilities by licensing the technology and hiring the architects behind it.
Outlook and Valuation
Rosenblatt maintained a Buy rating and a $245 price target for NVDA shares, noting that the potential integration of Nvidia’s CUDA development tools with Groq’s LPU hardware could further expand the chipmaker’s reach across multiple end markets.
The Groq deal positions Nvidia to remain the undisputed leader of the next era of AI infrastructure.
NVDA Price Action: Nvidia shares were up 1.77% at $191.95 on Friday, according to data from Benzinga Pro.
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