Nvidia's roughly $20 billion arrangement with AI chip startup Groq is now the subject of a stockholder lawsuit. The complaint, reported by CNBC, alleges that Groq's shareholders were shortchanged because the deal's structure favored certain insiders over the company's broader investor base.
According to the lawsuit, Nvidia assigned $17 billion of the total to a license labeled "non-exclusive" and set aside $3 billion in restricted stock units for roughly 150 to 200 Groq engineers who joined Nvidia. The suit also claims that the investment funds which designated Groq board members stood to gain from a later squeeze-out, and that a conflicted board majority approved the terms at a cost of billions to stockholders.
Nvidia CEO Jensen Huang's email to employees at the time described the deal as expanding Nvidia's AI factory architecture with Groq's low-latency processors, while stressing that Nvidia was licensing Groq's IP and hiring talent, not acquiring the company. The lawsuit challenges whether that structure fairly compensated Groq's stockholders.