Former Groq Engineers Sue Over Nvidia’s $20 Billion Deal, Alleging Stockholders Were Shortchanged

Former Groq engineers Joshua Rubin and Benjamin Serebrin have filed a lawsuit in the Delaware Court of Chancery alleging that Nvidia’s $20 billion deal with the AI chip startup "squeezed out" stockholders. The plaintiffs, who left Groq before the deal was announced but retained stock, claim the transaction offered a "lowball" price and bypassed the stockholder vote required by Delaware law.

Allegations of Board Conflict

The lawsuit asserts that Groq’s board approved the licensing agreement without a process designed to test or maximize value. It alleges that $17 billion was allocated to a "non-exclusive" license, while an additional $3 billion in Nvidia restricted stock units (RSUs) was set aside for Groq employees who moved to Nvidia. The plaintiffs argue that the board’s "conflicted choice" cost stockholders "billions of dollars."

Deal Structure and Response

In December, Groq announced a licensing agreement for its inference technology, with founder Jonathan Ross and president Sunny Madra joining Nvidia. Approximately 150 to 200 Groq engineers became Nvidia employees as part of the deal. Nvidia CEO Jensen Huang stated the agreement would integrate Groq’s low-latency processors into Nvidia’s AI factory architecture but emphasized that Nvidia was "not acquiring Groq as a company."

Groq has raised around $1 billion since June, including from Nvidia, and maintains it remains an independent company. A Groq spokesperson called the lawsuit "meritless" and stated the agreement delivered "exceptional value" for investors and employees.