NVIDIA Corporation (NVDA) stock showed modest gains in pre-market trading on December 26, 2025, following the announcement of a significant technology licensing agreement with AI chip startup Groq. The deal, which includes hiring Groq’s CEO and key executives, represents NVIDIA’s latest strategic move to strengthen its position in the rapidly evolving AI inference market.
Trading at $190.19 in pre-market hours as of 9:07 AM EST, up $1.58 (+0.84%) from the previous close of $188.61, the stock’s positive movement reflects investor optimism about the chipmaker’s continued expansion in artificial intelligence technologies.
NVIDIA Brings Groq Leadership and Technology In-House
NVIDIA has entered into a non-exclusive licensing agreement with Groq, an AI chip startup specializing in inference technology, where artificial intelligence models respond to user requests after training. The deal brings Jonathan Ross, Groq’s founder and a veteran of Google’s AI chip program, along with President Sunny Madra and other key engineering team members to NVIDIA.
While CNBC reported the transaction value at approximately $20 billion in cash, neither company officially confirmed the financial details. Groq announced it will continue operating independently under new CEO Simon Edwards, with its cloud business remaining operational.
The agreement follows a pattern among major technology firms of acquiring talent and technology from promising startups without formal acquisitions, likely to avoid regulatory scrutiny. Groq, which more than doubled its valuation to $6.9 billion in September following a $750 million funding round, specializes in a unique approach using on-chip SRAM memory rather than external high-bandwidth memory chips.
This technology enables faster interactions with chatbots and AI models, addressing a critical bottleneck in the AI industry, though it limits the size of models that can be served.
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NVDA Stock Gains Modestly Amid Competitive AI Landscape
As of December 24, 2025, at market close, NVIDIA stock stood at $188.61, down $0.60 (-0.32%), with a market capitalization of $4.592 trillion. The company has delivered exceptional returns for investors, with year-to-date gains of 40.49% compared to the S&P 500’s 17.86%, and a remarkable 5-year return of 1,355.63% versus the benchmark’s 87.20%.
The stock trades at a forward P/E ratio of 24.69, with analysts setting an average price target of $253.02, suggesting significant upside potential from current levels.
The Groq deal strengthens NVIDIA’s competitive position in the inference market, where it faces increased competition from traditional rivals like Advanced Micro Devices and startups such as Cerebras Systems. During his keynote speech in 2025, CEO Jensen Huang emphasized NVIDIA’s strategy to maintain leadership as AI markets shift from training to inference workloads.
Bernstein analyst Stacy Rasgon noted that structuring the deal as a non-exclusive license may help maintain competitive dynamics while bringing Groq’s leadership and technical expertise to NVIDIA, with regulatory risk mitigated by the company’s strong relationship with the Trump administration.
Disclaimer: The author does not hold or have a position in any securities discussed in the article. All stock prices were quoted at the time of writing.
About the author
Tim Fries is the cofounder of The Tokenist. He has a B. Sc. in Mechanical Engineering from the University of Michigan, and an MBA from the University of Chicago Booth School of Business. Tim served as a Senior Associate on the investment team at RW Baird’s US Private Equity division, and is also the co-founder of Protective Technologies Capital, an investment firm specializing in sensing, protection and control solutions.