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Nvidia just paid $20B for a company that missed its revenue target by 75%

220 points by joshcsimmons 10mo ago

paxys 10mo ago
What’s more concerning is the growing trend of big tech companies “acquiring” a startup’s leadership team and IP and screwing over all the employees holding equity.
onion2k 10mo ago
That probably explains why the Groq board accepted the deal.
wkat4242 10mo ago
It's a shame. Groq was really great. Nvidia is stifling innovation here. I don't understand how market regulators allow this.
- pstuart 10mo ago
  What market regulators?
- reverserdev 10mo ago
  Funny how everyone shits on Nvidia's monopoly when we've got Google walking around after winning a monumental antitrust case regarding their Android/Chrome/Google information monopoly. How do the market regulators allow that?
  - newsclues 10mo ago
    Market regulators are working hard to ensure regulatory capture for the big players.
  - DrewADesign 10mo ago
    > How do the market regulators allow that? Same way I reckon. Both are bad. > Funny how everyone shits on Nvidia's monopoly when we've got Google walking around after winning a monumental antitrust case regarding their Android/Chrome/Google information monopoly. ... are you implying people around here don't give google flak for monopolistic business practices? That doesn't square with my experience, here.
  - oh_my_goodness 10mo ago
    My first grade teacher used to claim that two wrongs didn't make a right.
  - wkat4242 10mo ago
    One wrong doesn't make another wrong right.
- Aromasin 10mo ago
  The FTC requested significant increases for technology and economic analysis for FY2025 ($535M), but was given a static budget with plans to cut by 11%. FTC chair Ferguson reduced staff from 1,315 to 1,221 and aims to reach around 1,100 through attrition to align with lower budgets. Oversight hearing is worth a listen to get a better idea on how the current administation is harming regulators: https://www.youtube.com/watch?v=0NZxkvYaVuk https://www.youtube.com/watch?v=0NZxkvYaVuk
  - pas 10mo ago
    what exactly they are doing if they don't look at the acquisitions of the biggest company?
- bilbo0s 10mo ago
  I know no one wants to hear this, but this “acquisition “ is nothing of the kind. It’s just Nvidia hiring the four or five guys they need without having to take on the rest of groq. Which, as it turns out, is worthless without those four or five guys. This is what happens when companies figure out they don’t have to buy out other companies. They just need to pay off shareholders for the right to hire key employees. Which is convenient, since the key four or five guys are usually pretty big shareholders. It’s no longer necessary to monopolize a market. You can monopolize intellectual capital by just paying ungodly sums of money. The rest will take care of itself.
  - wkat4242 10mo ago
    Maybe it was not the right term, "acquisition". But really the end-result is the same.
- credit_guy 10mo ago
  > It's a shame. Groq was really great. Nvidia is stifling innovation here. I don't share your view. Groq continues to exist. Nvidia did not take any or their hardware, so the same Groq you access on OpenRouter will exist tomorrow or one year from now. If anything, they'll significantly increase their presence, since they just got $20 billion in cash. As for Nvidia stifling innovation: one can argue that they do the opposite. They hired key personnel from Groq (including their founder and CEO, Jonnathan Ross). These people agreed to the move, presumably for the money, but most likely also because they think they can deliver even more if they have access to Nvidia's resources. So, in terms of overall innovation, it will most likely go up. But you can say that they stifle independent innovation. Maybe, but the case for that is not that open and shut as it might seem. They entered a non-exclusive licensing agreement with Groq. Which means Groq can provide their "secret sauce" to other interested entities, maybe Apple, maybe Intel or AMD, maybe OpenAI, maybe Oracle. The number of companies who could be interested in their tech is quite high. Or simply, Groq, with the many billions in unencumbered cash they just received will decide to go for version 2.0 of their tech, or they can significantly expand the GroqCloud. Their valuation just went from $6.5B to significantly higher than $20B. They can pursue an IPO, or they can issue debt. There are countless possibilities for Groq now.
  - wkat4242 10mo ago
    > I don't share your view. Groq continues to exist. Nvidia did not take any or their hardware, so the same Groq you access on OpenRouter will exist tomorrow or one year from now. If anything, they'll significantly increase their presence, since they just got $20 billion in cash. The linked article expects differently: > Nvidia’s buying them with their insanely inflated war chest. They don’t want a chunk taken out of their market share. They can’t afford to take that chance. So it’s like they’re just saying: “Shut up, take the $20 billion, walk away from this project.” How much this is true I can't really verify myself but it certainly sounds concerning. > But you can say that they stifle independent innovation. But this is exactly what a market watchdog is supposed to prevent. A market with one player (or two) is no market. And Groq was going in a decidedly different direction than Nvidia. The linked article echoes my worries in other ways as well e.g. worker displacement, explosion of energy usage. I often equate it with the dotcom era, I worked on this thinking we made the world better. But the endgame, with the Google, Meta, pervasive tracking etc is much more dystopian. Especially considering the societal effects. Enshittification, corporate rule, polarisation due to social medias promoting "engagement" and thus conflicting content that get people riled up. I don't want the same to happen with AI here and it feels like they are already aligning the stars to make exactly that happen.
- vips7L 10mo ago
  There’s regulators??
- dnautics 10mo ago
  what was great about Groq? The token speed? Last I checked they aggressively throttled how many requests you could make.
- sireat 10mo ago
  Very simple - look for who has a stake in Groq currently: https://www.cnbc.com/2025/12/24/nvidia-buying-ai-chip-startup-groq-for-about-20-billion-biggest-deal.html https://www.cnbc.com/2025/12/24/nvidia-buying-ai-chip-startu... "Davis, whose firm has invested more than half a billion dollars in Groq since the company was founded in 2016, said the deal came together quickly. Groq raised $750 million at a valuation of about $6.9 billion three months ago. Investors in the round included Blackrock and Neuberger Berman, as well as Samsung, Cisco , Altimeter and 1789 Capital, where Donald Trump Jr. is a partner." POP QUIZ - Which minority partner is the key here?
Kapura 10mo ago
This is what happen when your government is run primarily thru corruption. sorry, not corruption! retainer fees and timely stock purchases. different thing!
- bdangubic 10mo ago
  so same as always, eh? or different this time around?
  - wredcoll 10mo ago
    Yes, it is different. Pretending it is the same is just another way to defend the corrupt ones.
    - bdangubic 10mo ago
      how exactly is different…? I give you Trump, you give me Biden. I give you Scott, you give me Pelosi. I give you Bush, you give me Clinton… it is not different but regardless of whether it is or isn’t no one is defending it. it is just a disservice to everyone to think somehow magically things are all this different now than before, same crap different toilet paper
      - wkat4242 10mo ago
        It's different because it's all about that now. The Clintons had their scandals, the "pay to play" lists etc. We all know they are in bed with the moneymen. But it didn't define their administration, and they were pretty hush-hush about it. Trump on the other hand is completely open about this. He even brags about making money from deals, something that was previously considered a huge conflict of interest. He appoints people based on loyalty alone, not knowledge or experience. He bullies countries into compliance with mafia tactics ("appease me or else..." tariffs or even war like venezuela and greenland). It's a huge moral shift where that is no longer unthinkable. The US used to have values. It was a country that was at least trying to be the good guy. Also, the constitution used to be holy. Now Trump is flaunting the 1st amendment on a daily basis (limiting LGBTIQ+ speech, establishing America as a "christian country" which is explicitly forbidden). I think all these developments are very concerning. I don't live in America but considering it is still a big world power it does worry me.
mrcwinn 10mo ago
This is missing the point. Even at a clipped revenue projection - $500m at $2b is a 4x multiple on revenue. A 4x for an AI cloud+infra play that targets speed and cost? Where do I send the check? If NVIDIA believes it can take this and scale it, $20b is a no brainer.
- joshcsimmons 10mo ago
  Agreed - but why not pay 14B (double their highest valuation)?
wyldfire 10mo ago
> I don't understand how market regulators allow this. The US government is literally for sale. Businesses know that this window is limited and are executing antitrust manuvers left and right while they can.
- DicIfTEx 10mo ago
  Under current DoJ antitrust guidelines, there's nothing to stop a future administration from reviewing any anti-competitive actions ignored by the current one as part of an anti-competitive series of actions: https://www.justice.gov/atr/merger-guidelines/applying-merger-guidelines/guideline-8 https://www.justice.gov/atr/merger-guidelines/applying-merge... So those businesses either know, or expect, that either: a) these guidelines will be changed in a way that makes them hard or impossible to revert (i.e. through legislation or a Supreme Court judgement); or b) there is little risk of a future change of administration.
  - dragonwriter 10mo ago
    Or (c) that any future administration is going to have a lot of more pressing concerns that will drown out seriously relitigating past mergers and acquisitions, and any concerns they do have will most likely be mollified with agreed remedies that sacrifice far less than the value of doing the merger. Very few administrations do everything they theoretically could under the law and their own guidelines (even the ones that also do lots that violates both.)
    - navigate8310 10mo ago
      I don't think future administrators would enforce laws retrospectively and thereby dent their business friendly image in the process.
  - beart 10mo ago
    A quick google search indicates the average tenure of a CEO is ~7 years. I wonder if there should be a c) There is a lack of meaningful planning beyond the current status quo.
dheera 10mo ago
It was probably less about revenue targets and more about pre-emptively removing potential future competition while it is still relatively cheap.
Ericson2314 10mo ago
The writing style here is so belittling, and frankly stupid. E.g. "billion is so big!", uh, I've heard of a billion before, and then comparing the value of a company to a single person's salary, as if that was very relevant.
- joshcsimmons 10mo ago
  Go talk to someone outside of tech this week, preferably someone working in the trades or something else that's less dependent on a computer, and ask them about their AI use. You'd be surprised how new a lot of the tech concepts in this article are to people that might have only heard of ChatGPT. That is who I'm writing for.
  - NetMageSCW 10mo ago
    And they aren’t reading you, so lots of wasted words.
    - joshcsimmons 10mo ago
      Brother nobody is reading me I only have like 150 substack followers.
  - aunty_helen 10mo ago
    Was just walking past a construction site and heard some of their banter. Didn’t realise the common man could debate the benefits of an LPU over GPGPU so eloquently. One of them even compared SRAM vs DRAM as being like a cheetah vs an injured antelope ;)
- NetMageSCW 10mo ago
  Exactly. Lots of condescension.
gmerc 10mo ago
Ya well, startups are just low risk R&D facilities in service of big tech now https://centreforaileadership.org/resources/opinion_startups_are_just_big_tech_rnd_now/ https://centreforaileadership.org/resources/opinion_startups...
- oh_my_goodness 10mo ago
  I don't understand what "low risk" means here. For a start-up, 99% risk of failure is low. What are we comparing that to?
  - xgulfie 10mo ago
    Well usually they only get acquired when they have something the purchaser wants, revenue was obviously not the get here
    - oh_my_goodness 10mo ago
      I don't exactly disagree. But the word "obvious" doesn't work very well during a bubble. Sure, yes, the current revenue doesn't justify the purchase price. But that doesn't mean that anything justifies the purchase price. We can't work backward rationally from "this deal makes sense" and get to "here's why". Corporate acquisitions often don't work that way, even when there's no bubble. The price is often just not justified at all. By anything. In many cases they're just capitalizing testosterone.
      - xgulfie 10mo ago
        Yeah I'm with you, didn't mean to imply there was any sort of underlying wisdom or truth behind the choice. People just love to rationalize
    - lostlogin 10mo ago
      The tv series Silicon Valley has a good episode where they discuss the importance of a start-up not having any revenue. Being pre revenue apparently means unlimited potential, with any level of revenue being bad, as you always have to grow it.
ismailmaj 10mo ago
Nothing against the author, the content is good. I just wish this wasn't fluffed out with AI.
- joshcsimmons 10mo ago
  It's not - I prefer to record a YouTube video first (I speak better than I write) https://www.youtube.com/watch?v=2po-s2yOCcg https://www.youtube.com/watch?v=2po-s2yOCcg Then I run that through a transcription app (so AI I suppose but still my words, shout out to Scriber Pro which I found via HN: https://news.ycombinator.com/item?id=45591222 https://news.ycombinator.com/item?id=45591222) then I edit down and try to change my verbs (visual to written) where necessary.
- miltonlost 10mo ago
  What made you think there was AI in it?
laweijfmvo 10mo ago
Kind of weird to base the bubble on how tall a stack of $100 bills is...
- joshcsimmons 10mo ago
  I just thought it was cool
- deleted 10mo ago
  [deleted]
WhereIsTheTruth 10mo ago
The American Dream /s
- joshcsimmons 10mo ago
  Emphasis on Dream!
klelatti 10mo ago
> Then in maybe one of the best rug pulls of all time, in July they quietly changed their valuation to $500 million. A 75% cut in four months. I’ve never seen anything like that since the 2008 financial crisis. Not sure where the author is getting their information from but there is seemingly little correlation between the investment rounds quoted in this post and other online sources. No mention for example of the Series E that valued Groq at $6.9bn.
- joshcsimmons 10mo ago
  Thank you for calling this out. I have edited and added a footnote there. Their valuation wasn't 500mil it was their revenue projection. The 6.9bn valuation is accurate though https://www.prnewswire.com/news-releases/groq-raises-750-million-as-inference-demand-surges-302558961.html https://www.prnewswire.com/news-releases/groq-raises-750-mil... https://www.reuters.com/business/groq-more-than-doubles-valuation-69-billion-investors-bet-ai-chips-2025-09-17/ https://www.reuters.com/business/groq-more-than-doubles-valu...
  - lostlogin 10mo ago
    It’s good that you have done that but does that section make sense? It says there was a 75% revenue cut, but the prior number is valuation, not revenue. Or was valuation and revenue the same at that time (seems unlikely)? Edit: some searching about suggests that Groq initially projected $2 billion in revenue for 2025, later cutting that forecast to $500 million. That appears to have be what this article is trying to say. https://www.investing.com/news/company-news/groq-slashes-2025-revenue-projections-to-500-million--the-information-93CH-4158309 https://www.investing.com/news/company-news/groq-slashes-202...
dlcarrier 10mo ago
If your goal isn't four times greater than what you're likely to achieve, than you might as well not have goals. — A motivational speaker, probably Revenue targets are meaningless, especially in hyped fields.
simonebrunozzi 10mo ago
> To visualize $1.5 billion: if you cashed that check out in $100 bills and stacked them one on top of another, it would reach a five story building. For ordinary plebeians like us, at the average US salary of around $75K, you’d need to work 20,000 years to earn that. No, we don't need to visualize that.
- joshcsimmons 10mo ago
  Hahaha why are people so mad at this visualization? I thought it was pretty cool!
  - moralestapia 10mo ago
    Most people are not doers but losers. When someone does anything, they like to throw s*t at it. Doers are perpetually disliked by losers simply because they can do stuff while them can't. It's natural that the losers' actions are aligned towards making doers disappear, but it's usually a very low level and pathetic threat to doers. I enjoyed reading your article and hope you have more stuff coming :). Keep it going!
    - bigyabai 10mo ago
      If you are going to be a doer - make sure to never give anyone else equity. Lest a private party with a liquid $20 billion creeps around the corner...
  - derangedHorse 10mo ago
    The average US salary isn't $75k btw. That figure is usually quoted from the reported median household income in 2022[1]. The median personal income, which is the figure that should* be quoted, was around $45k for 2024[2]. [1] https://fred.stlouisfed.org/series/MEHOINUSA646N https://fred.stlouisfed.org/series/MEHOINUSA646N [2] https://fred.stlouisfed.org/series/MEPAINUSA646N https://fred.stlouisfed.org/series/MEPAINUSA646N
- chasely 10mo ago
  It also seems, really low? A stack of bills is roughly 0.5 inches. Assuming a 12-ft joist-to-joist spacing, that's 12 feet per floor \times 12 inches per foot \times 2 stacks per inch = 288 stacks per floor = $2.88M per floor since a stack of 100s is $10k So that would be a 1,000M / 2.88M ~ 347 story building. Or is my unit conversion wildly off from dealing with sick kids over the holidays?
akulbe 10mo ago
This article was good, but the blaming the us-east-1 outage on layoffs doesn't seem accurate.
- NetMageSCW 10mo ago
  The article was terrible, it read like someone desperately justifying there already made conclusions with anything possible.
  - joshcsimmons 10mo ago
    Thank you for reading it.
- joshcsimmons 10mo ago
  Thank you for reading. Outages could be vibe regressions, could be something else. I'm definitely making an opinionated leap there.
  - Anon1096 10mo ago
    Opinionated and uneducated. A favorite pastime of the internet it's just a shame that we give so much attention to such blogposts.
- TiredOfLife 10mo ago
  Gell-Mann Amnesia Effect.
ProofHouse 10mo ago
And it was a no brainer
ossa-ma 10mo ago
The bubble take is tired. This was regulatory arbitrage: IP licensing instead of acquisition to dodge CFIUS/antitrust. The $13B premium to avoid years of hold up while enriching Chamath and giving Trump's AI Czar a Christmas present. So many other things at play here than just "AI bubble so big it will boom". Here's my take on what actually happened: https://ossa-ma.github.io/blog/groq https://ossa-ma.github.io/blog/groq
ripped_britches 10mo ago
You are missing the point that it is a strategic acquisition to kickstart a new vertical that they have struggled with: serving inference. They have tried to organically grow this and do weird things like inference within their other customers’ clouds. It certainly isn’t a “panic” as nvidia is so flush with cash. This is a minuscule amount of money for them.
pizlonator 10mo ago
It’s amusing to see repeated “it’s a bubble” takes. One of them will surely be right eventually!
- ACCount37 10mo ago
  The man who said the market's about to crash this year for the past 40 years finally proven right!
hendersoon 10mo ago
Yes, this was a defensive move from Nvidia. My understanding is Groq failed to deploy their second-gen chips on time, which caused their stock to deflate. Groq's primary advantage over Cerebras and SambaNova, as I see it, is they don't fabricate on TSMC. That's attractive to Nvidia, who doesn't want to give up any of their datacenter GPU allocation.
arisAlexis 10mo ago
They understand the value of the tech
- dnautics 10mo ago
  chips designed to run ResNET? I guess the haskell compiler they built is impressive (it made it so 8 racks of chips designed to run ResNET can run llama 70b with extremely low latency). Edit: my information might be old, I don't know if they successfully taped out their second gen chip or not. Can anyone corroborate?
  - wmf 10mo ago
    We've all been waiting for info about the second gen chip. I assume Nvidia saw something privately (good or bad) that triggered this acquisition.
Night_Thastus 10mo ago
Why do you think? Not because of any output of the company, of course. But because buying it helps perpetuate the hype and money cycle of the 'AI' trend for awhile longer. It may not look like it directly, but a purchase like this keeps Nvidia's stock up in the future, which is all investors care about.
- iknowSFR 10mo ago
  If this is true, is it just the HN community that understands this? Otherwise, wouldn’t it make sense that the market understands this already and doesn’t fall for the hype? It doesn’t pass the smell test for me that it’s that transparent of a play for hype. What am I missing?
  - wmf 10mo ago
    AI is real and it's also hyped. There's circular financing and real money involved. Groq has good tech and smart people and Nvidia is also taking a competitor off the board. People who only see one side have a lack of imagination.
gandalfgeek 10mo ago
> About a year ago, Groq announced a $1.5 billion infrastructure investment deal with Saudi Arabia. They also secured a $750 million Series D funding round.... Then in maybe one of the best rug pulls of all time, in July they quietly changed their revenue projections to $500 million. A 75% cut in four months. I’ve never seen anything like that since the 2008 financial crisis. Not following the core argument here. Author seems to be comparing valuation in funding rounds to revenue projections. Revenue projection was revised downward, valuation was not. Good point about not running the proprietary models, but that doesn't preclude strategic fit with Nvidia.
- IshKebab 10mo ago
  Yeah the point is you aren't supposed to mislead investors with overly rosy revenue projections. That's fraud (but probably hard to prove). If they told the investors privately then they're probably fine, but I doubt they did.
  - richardwhiuk 10mo ago
    In private companies, it's much more caveat emptor, than in the public markets.
  - ralph84 10mo ago
    Any time a forward-looking statement is given in an investment context it has a safe harbor caveat attached about how it could be wrong. Companies miss revenue projections all of the time. That's not fraud.
    - illiac786 10mo ago
      It is if you lied.
      - toomuchtodo 10mo ago
        Prove the lie, that is the challenge.
psionides 10mo ago
> At that time, the company was valued at $2 billion. Hello bubble. Then in maybe one of the best rug pulls of all time, in July they quietly changed their revenue projections to $500 million. A 75% cut in four months. I feel like I'm missing something here…
- derangedHorse 10mo ago
  No, the author is just stupidly spreading misinformation. Looking through their other posts, it looks like he has an agenda to prove that we're in an AI bubble.
tzury 10mo ago
A) What’s 20b comparing to the extravagant current valuation of Nvidia at 4.64t? https://claude.ai/public/artifacts/8c395eb5-8d22-431f-b6ba-047f72e053f5 https://claude.ai/public/artifacts/8c395eb5-8d22-431f-b6ba-0... B) All info the OP(= author) knows is known to the professionals dealing with the due diligence. They decided to do so while looking at data which is not available the public. So assuming they know some things why we don’t know is not a far fetched idea.
jonplackett 10mo ago
Killing your competition is priceless though
ck2 10mo ago
In three years China will be making far cheaper clones of Nvidia chips Current administration just handed it to them for a bribe https://www.bbc.com/news/articles/ckg9q635q6po https://www.bbc.com/news/articles/ckg9q635q6po They'll tear them down and x-ray/electron-microscope it and they've gotten exceeding great at cloning chips
- FattiMei 10mo ago
  Underrated comment. We are damaging our economy and giving advantages to our real competitors
lacoolj 10mo ago
Since this article mentions SRAM, which not everyone knows a lot about, this could be helpful for anyone interested: https://people.freebsd.org/~lstewart/articles/cpumemory.pdf https://people.freebsd.org/~lstewart/articles/cpumemory.pdf
- joshcsimmons 10mo ago
  It was the first I came across the concept while writing this. Thanks for sharing excited to read
egberts1 10mo ago
It's a throwaway company used to tie up and defer account receivables for stock reporting, no?
derangedHorse 10mo ago
Groq is not a publicly traded company and has no legal reporting requirements. Sure, their projected revenue numbers they gave to investors dropped from $2b in February to $500m in July, but a later funding round in September showed it wasn't significant to how insiders saw the company. Contrary to what this article would imply, their valuation more than doubled from $2.8b last year to $6.9b this year after Groq's latest round of investment in September (after their revenue adjustment). Considering they increased revenue from $90m to $500m and got a $1.5b commitment from Saudi Arabia, I really don't see this being 'hype'. src: https://www.reuters.com/business/groq-more-than-doubles-valuation-69-billion-investors-bet-ai-chips-2025-09-17/ https://www.reuters.com/business/groq-more-than-doubles-valu...
greekrich92 10mo ago
Author seems to be conflating valuation and projected revenue
zamderax 10mo ago
I often tell startups if you have amazing revenue, that your startup might get a lower acquisition offer price because your acquirer doesn’t care about your revenue. They might just care about your tech.
JoeDohn 10mo ago
Chamath is involved, this is the only thing that you need to known. (it's probably a scamish company that will eventually belly up)
waltercool 10mo ago
[dead]

220 points by joshcsimmons 10mo ago

paxys 10mo ago

What’s more concerning is the growing trend of big tech companies “acquiring” a startup’s leadership team and IP and screwing over all the employees holding equity.

onion2k 10mo ago

That probably explains why the Groq board accepted the deal.

wkat4242 10mo ago

It's a shame. Groq was really great. Nvidia is stifling innovation here. I don't understand how market regulators allow this.

pstuart 10mo ago
What market regulators?
reverserdev 10mo ago
Funny how everyone shits on Nvidia's monopoly when we've got Google walking around after winning a monumental antitrust case regarding their Android/Chrome/Google information monopoly. How do the market regulators allow that?
- newsclues 10mo ago
  Market regulators are working hard to ensure regulatory capture for the big players.
- DrewADesign 10mo ago
  > How do the market regulators allow that? Same way I reckon. Both are bad. > Funny how everyone shits on Nvidia's monopoly when we've got Google walking around after winning a monumental antitrust case regarding their Android/Chrome/Google information monopoly. ... are you implying people around here don't give google flak for monopolistic business practices? That doesn't square with my experience, here.
- oh_my_goodness 10mo ago
  My first grade teacher used to claim that two wrongs didn't make a right.
- wkat4242 10mo ago
  One wrong doesn't make another wrong right.
Aromasin 10mo ago
The FTC requested significant increases for technology and economic analysis for FY2025 ($535M), but was given a static budget with plans to cut by 11%. FTC chair Ferguson reduced staff from 1,315 to 1,221 and aims to reach around 1,100 through attrition to align with lower budgets. Oversight hearing is worth a listen to get a better idea on how the current administation is harming regulators: https://www.youtube.com/watch?v=0NZxkvYaVuk https://www.youtube.com/watch?v=0NZxkvYaVuk
- pas 10mo ago
  what exactly they are doing if they don't look at the acquisitions of the biggest company?
bilbo0s 10mo ago
I know no one wants to hear this, but this “acquisition “ is nothing of the kind. It’s just Nvidia hiring the four or five guys they need without having to take on the rest of groq. Which, as it turns out, is worthless without those four or five guys. This is what happens when companies figure out they don’t have to buy out other companies. They just need to pay off shareholders for the right to hire key employees. Which is convenient, since the key four or five guys are usually pretty big shareholders. It’s no longer necessary to monopolize a market. You can monopolize intellectual capital by just paying ungodly sums of money. The rest will take care of itself.
- wkat4242 10mo ago
  Maybe it was not the right term, "acquisition". But really the end-result is the same.
credit_guy 10mo ago
> It's a shame. Groq was really great. Nvidia is stifling innovation here. I don't share your view. Groq continues to exist. Nvidia did not take any or their hardware, so the same Groq you access on OpenRouter will exist tomorrow or one year from now. If anything, they'll significantly increase their presence, since they just got $20 billion in cash. As for Nvidia stifling innovation: one can argue that they do the opposite. They hired key personnel from Groq (including their founder and CEO, Jonnathan Ross). These people agreed to the move, presumably for the money, but most likely also because they think they can deliver even more if they have access to Nvidia's resources. So, in terms of overall innovation, it will most likely go up. But you can say that they stifle independent innovation. Maybe, but the case for that is not that open and shut as it might seem. They entered a non-exclusive licensing agreement with Groq. Which means Groq can provide their "secret sauce" to other interested entities, maybe Apple, maybe Intel or AMD, maybe OpenAI, maybe Oracle. The number of companies who could be interested in their tech is quite high. Or simply, Groq, with the many billions in unencumbered cash they just received will decide to go for version 2.0 of their tech, or they can significantly expand the GroqCloud. Their valuation just went from $6.5B to significantly higher than $20B. They can pursue an IPO, or they can issue debt. There are countless possibilities for Groq now.
- wkat4242 10mo ago
  > I don't share your view. Groq continues to exist. Nvidia did not take any or their hardware, so the same Groq you access on OpenRouter will exist tomorrow or one year from now. If anything, they'll significantly increase their presence, since they just got $20 billion in cash. The linked article expects differently: > Nvidia’s buying them with their insanely inflated war chest. They don’t want a chunk taken out of their market share. They can’t afford to take that chance. So it’s like they’re just saying: “Shut up, take the $20 billion, walk away from this project.” How much this is true I can't really verify myself but it certainly sounds concerning. > But you can say that they stifle independent innovation. But this is exactly what a market watchdog is supposed to prevent. A market with one player (or two) is no market. And Groq was going in a decidedly different direction than Nvidia. The linked article echoes my worries in other ways as well e.g. worker displacement, explosion of energy usage. I often equate it with the dotcom era, I worked on this thinking we made the world better. But the endgame, with the Google, Meta, pervasive tracking etc is much more dystopian. Especially considering the societal effects. Enshittification, corporate rule, polarisation due to social medias promoting "engagement" and thus conflicting content that get people riled up. I don't want the same to happen with AI here and it feels like they are already aligning the stars to make exactly that happen.
vips7L 10mo ago
There’s regulators??
dnautics 10mo ago
what was great about Groq? The token speed? Last I checked they aggressively throttled how many requests you could make.
sireat 10mo ago
Very simple - look for who has a stake in Groq currently: https://www.cnbc.com/2025/12/24/nvidia-buying-ai-chip-startup-groq-for-about-20-billion-biggest-deal.html https://www.cnbc.com/2025/12/24/nvidia-buying-ai-chip-startu... "Davis, whose firm has invested more than half a billion dollars in Groq since the company was founded in 2016, said the deal came together quickly. Groq raised $750 million at a valuation of about $6.9 billion three months ago. Investors in the round included Blackrock and Neuberger Berman, as well as Samsung, Cisco , Altimeter and 1789 Capital, where Donald Trump Jr. is a partner." POP QUIZ - Which minority partner is the key here?

Kapura 10mo ago

This is what happen when your government is run primarily thru corruption. sorry, not corruption! retainer fees and timely stock purchases. different thing!

bdangubic 10mo ago
so same as always, eh? or different this time around?
- wredcoll 10mo ago
  Yes, it is different. Pretending it is the same is just another way to defend the corrupt ones.
  - bdangubic 10mo ago
    how exactly is different…? I give you Trump, you give me Biden. I give you Scott, you give me Pelosi. I give you Bush, you give me Clinton… it is not different but regardless of whether it is or isn’t no one is defending it. it is just a disservice to everyone to think somehow magically things are all this different now than before, same crap different toilet paper
    - wkat4242 10mo ago
      It's different because it's all about that now. The Clintons had their scandals, the "pay to play" lists etc. We all know they are in bed with the moneymen. But it didn't define their administration, and they were pretty hush-hush about it. Trump on the other hand is completely open about this. He even brags about making money from deals, something that was previously considered a huge conflict of interest. He appoints people based on loyalty alone, not knowledge or experience. He bullies countries into compliance with mafia tactics ("appease me or else..." tariffs or even war like venezuela and greenland). It's a huge moral shift where that is no longer unthinkable. The US used to have values. It was a country that was at least trying to be the good guy. Also, the constitution used to be holy. Now Trump is flaunting the 1st amendment on a daily basis (limiting LGBTIQ+ speech, establishing America as a "christian country" which is explicitly forbidden). I think all these developments are very concerning. I don't live in America but considering it is still a big world power it does worry me.

mrcwinn 10mo ago

This is missing the point. Even at a clipped revenue projection - $500m at $2b is a 4x multiple on revenue. A 4x for an AI cloud+infra play that targets speed and cost? Where do I send the check? If NVIDIA believes it can take this and scale it, $20b is a no brainer.

joshcsimmons 10mo ago
Agreed - but why not pay 14B (double their highest valuation)?

wyldfire 10mo ago

> I don't understand how market regulators allow this. The US government is literally for sale. Businesses know that this window is limited and are executing antitrust manuvers left and right while they can.

DicIfTEx 10mo ago
Under current DoJ antitrust guidelines, there's nothing to stop a future administration from reviewing any anti-competitive actions ignored by the current one as part of an anti-competitive series of actions: https://www.justice.gov/atr/merger-guidelines/applying-merger-guidelines/guideline-8 https://www.justice.gov/atr/merger-guidelines/applying-merge... So those businesses either know, or expect, that either: a) these guidelines will be changed in a way that makes them hard or impossible to revert (i.e. through legislation or a Supreme Court judgement); or b) there is little risk of a future change of administration.
- dragonwriter 10mo ago
  Or (c) that any future administration is going to have a lot of more pressing concerns that will drown out seriously relitigating past mergers and acquisitions, and any concerns they do have will most likely be mollified with agreed remedies that sacrifice far less than the value of doing the merger. Very few administrations do everything they theoretically could under the law and their own guidelines (even the ones that also do lots that violates both.)
  - navigate8310 10mo ago
    I don't think future administrators would enforce laws retrospectively and thereby dent their business friendly image in the process.
- beart 10mo ago
  A quick google search indicates the average tenure of a CEO is ~7 years. I wonder if there should be a c) There is a lack of meaningful planning beyond the current status quo.

dheera 10mo ago

It was probably less about revenue targets and more about pre-emptively removing potential future competition while it is still relatively cheap.

Ericson2314 10mo ago

The writing style here is so belittling, and frankly stupid. E.g. "billion is so big!", uh, I've heard of a billion before, and then comparing the value of a company to a single person's salary, as if that was very relevant.

joshcsimmons 10mo ago
Go talk to someone outside of tech this week, preferably someone working in the trades or something else that's less dependent on a computer, and ask them about their AI use. You'd be surprised how new a lot of the tech concepts in this article are to people that might have only heard of ChatGPT. That is who I'm writing for.
- NetMageSCW 10mo ago
  And they aren’t reading you, so lots of wasted words.
  - joshcsimmons 10mo ago
    Brother nobody is reading me I only have like 150 substack followers.
- aunty_helen 10mo ago
  Was just walking past a construction site and heard some of their banter. Didn’t realise the common man could debate the benefits of an LPU over GPGPU so eloquently. One of them even compared SRAM vs DRAM as being like a cheetah vs an injured antelope ;)
NetMageSCW 10mo ago
Exactly. Lots of condescension.

gmerc 10mo ago

Ya well, startups are just low risk R&D facilities in service of big tech now https://centreforaileadership.org/resources/opinion_startups_are_just_big_tech_rnd_now/ https://centreforaileadership.org/resources/opinion_startups...

oh_my_goodness 10mo ago
I don't understand what "low risk" means here. For a start-up, 99% risk of failure is low. What are we comparing that to?
- xgulfie 10mo ago
  Well usually they only get acquired when they have something the purchaser wants, revenue was obviously not the get here
  - oh_my_goodness 10mo ago
    I don't exactly disagree. But the word "obvious" doesn't work very well during a bubble. Sure, yes, the current revenue doesn't justify the purchase price. But that doesn't mean that anything justifies the purchase price. We can't work backward rationally from "this deal makes sense" and get to "here's why". Corporate acquisitions often don't work that way, even when there's no bubble. The price is often just not justified at all. By anything. In many cases they're just capitalizing testosterone.
    - xgulfie 10mo ago
      Yeah I'm with you, didn't mean to imply there was any sort of underlying wisdom or truth behind the choice. People just love to rationalize
  - lostlogin 10mo ago
    The tv series Silicon Valley has a good episode where they discuss the importance of a start-up not having any revenue. Being pre revenue apparently means unlimited potential, with any level of revenue being bad, as you always have to grow it.

ismailmaj 10mo ago

Nothing against the author, the content is good. I just wish this wasn't fluffed out with AI.

joshcsimmons 10mo ago
It's not - I prefer to record a YouTube video first (I speak better than I write) https://www.youtube.com/watch?v=2po-s2yOCcg https://www.youtube.com/watch?v=2po-s2yOCcg Then I run that through a transcription app (so AI I suppose but still my words, shout out to Scriber Pro which I found via HN: https://news.ycombinator.com/item?id=45591222 https://news.ycombinator.com/item?id=45591222) then I edit down and try to change my verbs (visual to written) where necessary.
miltonlost 10mo ago
What made you think there was AI in it?

laweijfmvo 10mo ago

Kind of weird to base the bubble on how tall a stack of $100 bills is...

joshcsimmons 10mo ago
I just thought it was cool
deleted 10mo ago
[deleted]

WhereIsTheTruth 10mo ago

The American Dream /s

joshcsimmons 10mo ago
Emphasis on Dream!

klelatti 10mo ago

> Then in maybe one of the best rug pulls of all time, in July they quietly changed their valuation to $500 million. A 75% cut in four months. I’ve never seen anything like that since the 2008 financial crisis. Not sure where the author is getting their information from but there is seemingly little correlation between the investment rounds quoted in this post and other online sources. No mention for example of the Series E that valued Groq at $6.9bn.

joshcsimmons 10mo ago
Thank you for calling this out. I have edited and added a footnote there. Their valuation wasn't 500mil it was their revenue projection. The 6.9bn valuation is accurate though https://www.prnewswire.com/news-releases/groq-raises-750-million-as-inference-demand-surges-302558961.html https://www.prnewswire.com/news-releases/groq-raises-750-mil... https://www.reuters.com/business/groq-more-than-doubles-valuation-69-billion-investors-bet-ai-chips-2025-09-17/ https://www.reuters.com/business/groq-more-than-doubles-valu...
- lostlogin 10mo ago
  It’s good that you have done that but does that section make sense? It says there was a 75% revenue cut, but the prior number is valuation, not revenue. Or was valuation and revenue the same at that time (seems unlikely)? Edit: some searching about suggests that Groq initially projected $2 billion in revenue for 2025, later cutting that forecast to $500 million. That appears to have be what this article is trying to say. https://www.investing.com/news/company-news/groq-slashes-2025-revenue-projections-to-500-million--the-information-93CH-4158309 https://www.investing.com/news/company-news/groq-slashes-202...

dlcarrier 10mo ago

If your goal isn't four times greater than what you're likely to achieve, than you might as well not have goals. — A motivational speaker, probably Revenue targets are meaningless, especially in hyped fields.

simonebrunozzi 10mo ago

> To visualize $1.5 billion: if you cashed that check out in $100 bills and stacked them one on top of another, it would reach a five story building. For ordinary plebeians like us, at the average US salary of around $75K, you’d need to work 20,000 years to earn that. No, we don't need to visualize that.

joshcsimmons 10mo ago
Hahaha why are people so mad at this visualization? I thought it was pretty cool!
- moralestapia 10mo ago
  Most people are not doers but losers. When someone does anything, they like to throw s*t at it. Doers are perpetually disliked by losers simply because they can do stuff while them can't. It's natural that the losers' actions are aligned towards making doers disappear, but it's usually a very low level and pathetic threat to doers. I enjoyed reading your article and hope you have more stuff coming :). Keep it going!
  - bigyabai 10mo ago
    If you are going to be a doer - make sure to never give anyone else equity. Lest a private party with a liquid $20 billion creeps around the corner...
- derangedHorse 10mo ago
  The average US salary isn't $75k btw. That figure is usually quoted from the reported median household income in 2022[1]. The median personal income, which is the figure that should* be quoted, was around $45k for 2024[2]. [1] https://fred.stlouisfed.org/series/MEHOINUSA646N https://fred.stlouisfed.org/series/MEHOINUSA646N [2] https://fred.stlouisfed.org/series/MEPAINUSA646N https://fred.stlouisfed.org/series/MEPAINUSA646N
chasely 10mo ago
It also seems, really low? A stack of bills is roughly 0.5 inches. Assuming a 12-ft joist-to-joist spacing, that's 12 feet per floor \times 12 inches per foot \times 2 stacks per inch = 288 stacks per floor = $2.88M per floor since a stack of 100s is $10k So that would be a 1,000M / 2.88M ~ 347 story building. Or is my unit conversion wildly off from dealing with sick kids over the holidays?

akulbe 10mo ago

This article was good, but the blaming the us-east-1 outage on layoffs doesn't seem accurate.

NetMageSCW 10mo ago
The article was terrible, it read like someone desperately justifying there already made conclusions with anything possible.
- joshcsimmons 10mo ago
  Thank you for reading it.
joshcsimmons 10mo ago
Thank you for reading. Outages could be vibe regressions, could be something else. I'm definitely making an opinionated leap there.
- Anon1096 10mo ago
  Opinionated and uneducated. A favorite pastime of the internet it's just a shame that we give so much attention to such blogposts.
TiredOfLife 10mo ago
Gell-Mann Amnesia Effect.

ProofHouse 10mo ago

And it was a no brainer

ossa-ma 10mo ago

The bubble take is tired. This was regulatory arbitrage: IP licensing instead of acquisition to dodge CFIUS/antitrust. The $13B premium to avoid years of hold up while enriching Chamath and giving Trump's AI Czar a Christmas present. So many other things at play here than just "AI bubble so big it will boom". Here's my take on what actually happened: https://ossa-ma.github.io/blog/groq https://ossa-ma.github.io/blog/groq

ripped_britches 10mo ago

You are missing the point that it is a strategic acquisition to kickstart a new vertical that they have struggled with: serving inference. They have tried to organically grow this and do weird things like inference within their other customers’ clouds. It certainly isn’t a “panic” as nvidia is so flush with cash. This is a minuscule amount of money for them.

pizlonator 10mo ago

It’s amusing to see repeated “it’s a bubble” takes. One of them will surely be right eventually!

ACCount37 10mo ago
The man who said the market's about to crash this year for the past 40 years finally proven right!

hendersoon 10mo ago

Yes, this was a defensive move from Nvidia. My understanding is Groq failed to deploy their second-gen chips on time, which caused their stock to deflate. Groq's primary advantage over Cerebras and SambaNova, as I see it, is they don't fabricate on TSMC. That's attractive to Nvidia, who doesn't want to give up any of their datacenter GPU allocation.

arisAlexis 10mo ago

They understand the value of the tech

dnautics 10mo ago
chips designed to run ResNET? I guess the haskell compiler they built is impressive (it made it so 8 racks of chips designed to run ResNET can run llama 70b with extremely low latency). Edit: my information might be old, I don't know if they successfully taped out their second gen chip or not. Can anyone corroborate?
- wmf 10mo ago
  We've all been waiting for info about the second gen chip. I assume Nvidia saw something privately (good or bad) that triggered this acquisition.

Night_Thastus 10mo ago

Why do you think? Not because of any output of the company, of course. But because buying it helps perpetuate the hype and money cycle of the 'AI' trend for awhile longer. It may not look like it directly, but a purchase like this keeps Nvidia's stock up in the future, which is all investors care about.

iknowSFR 10mo ago
If this is true, is it just the HN community that understands this? Otherwise, wouldn’t it make sense that the market understands this already and doesn’t fall for the hype? It doesn’t pass the smell test for me that it’s that transparent of a play for hype. What am I missing?
- wmf 10mo ago
  AI is real and it's also hyped. There's circular financing and real money involved. Groq has good tech and smart people and Nvidia is also taking a competitor off the board. People who only see one side have a lack of imagination.

gandalfgeek 10mo ago

> About a year ago, Groq announced a $1.5 billion infrastructure investment deal with Saudi Arabia. They also secured a $750 million Series D funding round.... Then in maybe one of the best rug pulls of all time, in July they quietly changed their revenue projections to $500 million. A 75% cut in four months. I’ve never seen anything like that since the 2008 financial crisis. Not following the core argument here. Author seems to be comparing valuation in funding rounds to revenue projections. Revenue projection was revised downward, valuation was not. Good point about not running the proprietary models, but that doesn't preclude strategic fit with Nvidia.

IshKebab 10mo ago
Yeah the point is you aren't supposed to mislead investors with overly rosy revenue projections. That's fraud (but probably hard to prove). If they told the investors privately then they're probably fine, but I doubt they did.
- richardwhiuk 10mo ago
  In private companies, it's much more caveat emptor, than in the public markets.
- ralph84 10mo ago
  Any time a forward-looking statement is given in an investment context it has a safe harbor caveat attached about how it could be wrong. Companies miss revenue projections all of the time. That's not fraud.
  - illiac786 10mo ago
    It is if you lied.
    - toomuchtodo 10mo ago
      Prove the lie, that is the challenge.

psionides 10mo ago

> At that time, the company was valued at $2 billion. Hello bubble. Then in maybe one of the best rug pulls of all time, in July they quietly changed their revenue projections to $500 million. A 75% cut in four months. I feel like I'm missing something here…

derangedHorse 10mo ago
No, the author is just stupidly spreading misinformation. Looking through their other posts, it looks like he has an agenda to prove that we're in an AI bubble.

tzury 10mo ago

A) What’s 20b comparing to the extravagant current valuation of Nvidia at 4.64t? https://claude.ai/public/artifacts/8c395eb5-8d22-431f-b6ba-047f72e053f5 https://claude.ai/public/artifacts/8c395eb5-8d22-431f-b6ba-0... B) All info the OP(= author) knows is known to the professionals dealing with the due diligence. They decided to do so while looking at data which is not available the public. So assuming they know some things why we don’t know is not a far fetched idea.

jonplackett 10mo ago

Killing your competition is priceless though

ck2 10mo ago

In three years China will be making far cheaper clones of Nvidia chips Current administration just handed it to them for a bribe https://www.bbc.com/news/articles/ckg9q635q6po https://www.bbc.com/news/articles/ckg9q635q6po They'll tear them down and x-ray/electron-microscope it and they've gotten exceeding great at cloning chips

FattiMei 10mo ago
Underrated comment. We are damaging our economy and giving advantages to our real competitors

lacoolj 10mo ago

Since this article mentions SRAM, which not everyone knows a lot about, this could be helpful for anyone interested: https://people.freebsd.org/~lstewart/articles/cpumemory.pdf https://people.freebsd.org/~lstewart/articles/cpumemory.pdf

joshcsimmons 10mo ago
It was the first I came across the concept while writing this. Thanks for sharing excited to read

egberts1 10mo ago

It's a throwaway company used to tie up and defer account receivables for stock reporting, no?

derangedHorse 10mo ago

Groq is not a publicly traded company and has no legal reporting requirements. Sure, their projected revenue numbers they gave to investors dropped from $2b in February to $500m in July, but a later funding round in September showed it wasn't significant to how insiders saw the company. Contrary to what this article would imply, their valuation more than doubled from $2.8b last year to $6.9b this year after Groq's latest round of investment in September (after their revenue adjustment). Considering they increased revenue from $90m to $500m and got a $1.5b commitment from Saudi Arabia, I really don't see this being 'hype'. src: https://www.reuters.com/business/groq-more-than-doubles-valuation-69-billion-investors-bet-ai-chips-2025-09-17/ https://www.reuters.com/business/groq-more-than-doubles-valu...

greekrich92 10mo ago

Author seems to be conflating valuation and projected revenue

zamderax 10mo ago

I often tell startups if you have amazing revenue, that your startup might get a lower acquisition offer price because your acquirer doesn’t care about your revenue. They might just care about your tech.

JoeDohn 10mo ago

Chamath is involved, this is the only thing that you need to known. (it's probably a scamish company that will eventually belly up)

waltercool 10mo ago

[dead]