Nvidia Says It Never Bought Groq. A Delaware Lawsuit Says That's the Trick.

Nvidia closed the largest transaction in its history on December 24, 2025, and maintains to this day that it never bought anything. Roughly $20 billion changed hands, according to reporting by CNBC. Groq founder and CEO Jonathan Ross, president Sunny Madra, and — by the count in a newly unsealed legal complaint — between 150 and 200 of the startup's core engineers became Nvidia employees. Groq's inference technology, the low-latency processors that had made it one of the most credible challengers to Nvidia's dominance in AI inference, moved with them under a license Nvidia was careful to label "non-exclusive."

Jensen Huang said the quiet part in an email to staff obtained by CNBC at the time: "While we are adding talented employees to our ranks and licensing Groq's IP, we are not acquiring Groq as a company."

On October 2, two former Groq engineers asked the Delaware Court of Chancery to treat that sentence as the problem rather than the defense. Their lawsuit, unsealed on October 5, is the first time the target company's own shareholders have put the "reverse acqui-hire" — Big Tech's favorite deal structure of the AI era — on trial in the court that effectively writes American corporate law.

The deal that officially never happened

The structure, as described in the complaint and reported by CNBC, worked like this: Nvidia allocated $17 billion to a non-exclusive license for Groq's inference technology and set aside a further $3 billion in Nvidia restricted stock units for the Groq employees who moved with it. No merger agreement. No tender offer. No shareholder vote. Groq the corporate entity stayed behind — it kept its GroqCloud platform, declared itself an "independent company," and has since raised around $1 billion from investors that include Nvidia itself, per CNBC.

For Nvidia, the elegance of the design was that almost none of the machinery that normally governs a $20 billion acquisition ever switched on. There was no Hart-Scott-Rodino pre-merger filing, because formally there was no merger. And because the money was characterized as a licensing fee rather than merger consideration, it did not have to be distributed across Groq's capital structure the way a sale of the company would have been.

That last point is where the lawsuit lives.

A playbook with a missing chapter

The license-and-hire structure did not start with Groq. Microsoft reportedly paid around $650 million to Inflection AI in March 2024 while hiring away Mustafa Suleyman and most of its team. Google paid a reported $2.7 billion to Character.AI in August 2024 to bring Noam Shazeer back, and a reported $2.4 billion for Windsurf's leadership in July 2025. Amazon absorbed Adept's founders in 2024. Meta's $14.3 billion purchase of a 49% stake in Scale AI in June 2025 was a variation on the same theme: get the asset, skip the merger.

Antitrust regulators circled several of those deals and landed on none of them. What had never been tested — until now — is the other flank: whether the boards of the hollowed-out startups breached their duties to their own shareholders by agreeing to the structure in the first place.

What the complaint alleges

Plaintiffs Joshua Rubin and Benjamin Serebrin, former Groq engineers who held common stock, allege that 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." The complaint, per CNBC and Law360, claims there was no market check and no rival bid, that a majority of the board was conflicted because the investment funds that seated its directors were positioned for "windfall returns" from a later squeeze-out of common holders at a "lowball" price, and that the board's choice "cost Groq's stockholders billions of dollars."

The valuation arithmetic explains the grievance. Groq reportedly raised at a $2.8 billion valuation in August 2024 and $6.9 billion in September 2025. Three months later, Nvidia paid roughly 2.9 times that last mark — but the complaint alleges the money flowed around the cap table rather than through it: $17 billion characterized as a license fee, $3 billion as retention equity for the people who left, and a residual squeeze-out for everyone who stayed behind holding common stock.

Groq rejects all of it. "Our licensing agreement with NVIDIA delivered exceptional value for Groq, our investors, and our employees," a spokesperson told CNBC. "This lawsuit is meritless and we will vigorously defend ourselves against it." The defendants are Groq's directors and a former officer — not Nvidia — and none of the allegations has been tested in court.

But whichever way Delaware rules, the case stopped being about one startup the moment it was filed. The real question is whether the deal structure that moved roughly $40 billion of AI assets in three years survives contact with corporate law — and Washington had already started asking it first.

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