Groq Shareholders Sue Over Nvidia's Indirect Acquisition: "Ordinary Shareholders Excluded"

Lawsuit Filed in Delaware Court on October 2

"Sale Occurred Without Proper Company Valuation"

As Nvidia has effectively acquired the AI semiconductor startup Groq through an indirect deal, Groq's shareholders have filed a lawsuit, alleging that the rights of existing shareholders were infringed.

On October 5 (local time), CNBC, a U.S. business news channel, reported that Joshua Rubin and Benjamin Serebrin, former engineers and shareholders of Groq, filed such a lawsuit in a Delaware court on October 2.

Jensen Huang, CEO of NVIDIA, is giving his acceptance speech after receiving the "Van Fleet Award" on the 28th of last month (local time) in New York, USA. New York, USA – Yonhap News Agency.

In the complaint, the two plaintiffs argued that the Groq board of directors essentially sold the company to Nvidia without going through the shareholder vote required by Delaware state law. They also pointed out that no proper procedures were taken to evaluate the value of the assets Nvidia acquired, or to verify whether a higher price could have been achieved. They emphasized that an excessively low price was presented to shareholders during this process.

Groq announced in December 2025 that it had entered into a total $20 billion contract with Nvidia. While the deal was formally labeled as a licensing agreement, controversy arose over the transaction being a de facto acquisition, as Nvidia secured a substantial portion of Groq's core personnel and intellectual property (IP).

According to the complaint, of the $20 billion transaction amount, Nvidia allocated $17 billion as a non-exclusive license fee for Groq's AI inference technology, and $3 billion was allotted as restricted stock units (RSUs) to Groq employees who moved to Nvidia. The plaintiffs claimed that due to this transaction structure, existing shareholders did not receive fair value for the company's core assets. They also asserted that a majority of Groq's board was entangled in the deal and that, as a result of the board's decision, shareholders suffered billions of dollars in losses.

In fact, following the deal, approximately 150 to 200 engineers, including Groq's co-founder and CEO Jonathan Ross and President Sunny Madra, moved to Nvidia. Nvidia maintained that it did not acquire Groq itself, but the plaintiffs contended that, given the departure of nearly all key technologies, executives, and personnel, the transaction was essentially no different from a company sale.

Jensen Huang, CEO of Nvidia, stated in an email to employees at the time of the deal that Groq's low-latency processors would be integrated into Nvidia's AI Factory architecture, thereby enhancing the company's AI inference and real-time processing capabilities. However, he also drew a clear line, saying, "We are hiring talent and licensing Groq's IP, not acquiring Groq itself."

Groq told CNBC that the licensing agreement with Nvidia brought significant value to Groq, its investors, and its employees, adding that it "will vigorously defend against the baseless lawsuit."

This content was produced with the assistance of AI translation services.