Former Groq engineers sue Nvidia over $20 billion licensing deal structure

Nvidia’s $20 billion arrangement with AI chip designer Groq is facing legal challenge from former company insiders who claim shareholders were denied a fair price and proper voting rights. The dispute centers on whether Groq’s board acted lawfully in structuring the deal as a licensing agreement rather than a traditional acquisition.

• Ex-Groq engineers Joshua Rubin and Benjamin Serebrin filed suit on October 2 in Delaware Court of Chancery alleging stockholders received a “lowball” price.
• Nvidia allocated $17 billion to a non-exclusive license and $3 billion in restricted stock units for Groq employees who joined the chip giant.
• Approximately 150 to 200 Groq engineers became Nvidia employees, while Groq founder Jonathan Ross and president Sunny Madra also joined Nvidia as part of the deal.

• $20 billion Total value of Nvidia’s transaction with Groq for assets and employee transfers
• $1 billion Amount Groq has raised since June, including investment from Nvidia itself
• $17 billion Portion of deal allocated by Nvidia to a non-exclusive licensing agreement
• $3 billion Nvidia restricted stock units set aside for Groq employees joining the company

CNBC reported that Groq stockholders are challenging the structure of Nvidia’s transaction with the AI chip startup announced in December. The lawsuit, filed by Rubin and Serebrin, who both held equity in Groq but had departed before the deal was announced, contends that the company’s board bypassed required shareholder voting and failed to maximize value in structuring the arrangement.

Board structure and alleged conflicts of interest

The complaint alleges that Groq’s board operated under conflicting interests when authorizing the Nvidia transaction. According to the filing, the board approved the deal in a manner designed to benefit investment funds with director representation while leaving other shareholders shortchanged. The lawsuit states that “a Board majority was conflicted as a result” and that “the Board’s conflicted choice cost Groq’s stockholders billions of dollars.”

The case further alleges Groq’s board “sold the company to Nvidia without the stockholder vote Delaware law requires and without any process designed to test or maximize the value of what Nvidia bought.”

Groq’s licensing agreement and employment arrangements

In December 2025, Groq announced it had entered a licensing agreement with Nvidia rather than a traditional sale, allowing the startup to continue operating as an independent company. Under the structure, Nvidia contributed $17 billion toward the non-exclusive license and allocated an additional $3 billion in restricted stock units to Groq employees who joined the chip manufacturer.

Nvidia CEO Jensen Huang stated in an employee email obtained by CNBC that the company was “not acquiring Groq as a company” but rather “adding talented employees to our ranks and licensing Groq’s IP.” Huang added that Nvidia planned to “integrate Groq’s low-latency processors into the NVIDIA AI factory architecture, extending the platform to serve an even broader range of AI inference and real-time workloads.” Groq founder Jonathan Ross, president Sunny Madra, and other senior leadership joined Nvidia as part of the arrangement, alongside 150 to 200 engineers from the startup.

Groq’s response and continued fundraising

A Groq spokesperson told CNBC that the licensing agreement “delivered exceptional value for Groq, our investors, and our employees.”

The company denied the allegations and stated it would “vigorously defend” against the lawsuit. Groq emphasized it remains “focused on serving our customers and building the world’s leading AI inference cloud.” Despite the legal challenge, Groq has raised approximately $1 billion since June, including investment from Nvidia itself, signaling continued backing from the chip giant even as former shareholders question the transaction’s fairness.

The BlockWest read. The suit hinges on process, not price discovery: Groq’s board structured a deal that avoided triggering Delaware’s appraisal rights and shareholder vote, effectively converting a company sale into two separate transactions. Whether that maneuver saves Nvidia legal cost while crystallizing losses for departing employees depends on how Delaware interprets Groq’s continued independence claim when its founder and 200 engineers report to Huang.

Delaware Court of Chancery will determine whether the board breach claims proceed or whether the licensing-plus-employment structure insulates Nvidia and Groq from appraisal review. The outcome may shape how future AI acquisitions are structured to minimize shareholder litigation risk.

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