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Former Groq Engineers Sue Over Nvidia’s $20B Deal
Former Groq engineers and shareholders Benjamin Serebrin and Joshua Rubin sued over the company’s 2025 deal with Nvidia. Their Delaware complaint alleges Groq’s board shortchanged some investors in a transaction involving a technology licen
AI.info Team · Written with AI ·
Two former Groq engineers who held shares in the company sued over its Nvidia deal on Friday, October 2, alleging the arrangement shifted Groq’s technology and nearly all its engineers to Nvidia while leaving other shareholders with a diminished company. The complaint, filed in Delaware’s corporate court, says Groq’s board failed to secure the best price and deal structure for all shareholders and did not let some vote. Those are allegations, not findings by a court.
The case challenges a transaction the companies described as a non-exclusive license, not an acquisition. Its central dispute is how to assess a deal that formally left Groq independent but, the plaintiffs say, moved its core technology and workforce to Nvidia while distributing benefits unevenly among investors and employees.
A license, a hiring wave and two different totals
Groq announced the agreement on December 24, 2025. Its public statement said Nvidia would license Groq’s inference technology, while founder Jonathan Ross, president Sunny Madra and other team members would join Nvidia. Groq said it would remain independent and continue running GroqCloud.
The Financial Times reports the arrangement as a $20 billion deal: $17 billion in license proceeds shared among Groq’s backers, plus a separate $3 billion pool of Nvidia stock bonuses for selected engineers who joined the chipmaker. The lawsuit says Nvidia hired “nearly all” of Groq’s engineers, as many as 200. Nvidia’s fiscal 2026 filing, however, records $17 billion in total consideration for the non-exclusive license and employee hires, and says it bought no Groq equity, customer contracts or existing products.
The differing totals reflect different descriptions of the arrangement: the news report’s $20 billion figure includes the separate stock-bonus pool, while Nvidia’s filing reports consideration for the transaction in its own accounting. The distinction matters to the lawsuit’s central question: whether the license and hiring should be evaluated as separate actions or as parts of a single deal that transferred much of Groq’s value.
Investors say the remaining Groq was worth more
Serebrin and Rubin allege that common shareholders were cashed out cheaply, while Ross and other senior employees could sell shares at a discount and receive separate compensation for joining Nvidia. They argue the payout failed to account for the technology’s future potential and the benefits Nvidia could gain from combining it with its own business. The plaintiffs also say the license proceeds were treated as taxable income for Groq.
Groq later pivoted away from chip design and toward AI cloud computing. Nvidia joined a funding round that valued the remaining company at $3.5 billion, a figure the plaintiffs say shows the value left behind exceeded the price at which some shareholders were bought out. The complaint points to BlackRock, Social Capital, Infinitum and Disruptive as “conflicted funds” on Groq’s board, alleging they benefited by staying connected to the surviving company; the funds are not named as defendants in the lawsuit.
Lawyers for the two former engineers wrote that the deal “grabbed ‘Groq’s valuable technology and the engineers who built Groq, took billions of dollars in benefits for itself, senior management, and affiliated funds that it did not share with Groq’s other stockholders’.” Nvidia declined to comment to the Financial Times, and Groq did not immediately respond to the publication’s request.
Delaware courts have not settled the acqui-hire question
The case tests whether a combination of technology licensing and large-scale hiring should face the same scrutiny as a conventional sale of a company. The plaintiffs argue Groq’s board had a duty to pursue the best available terms and obtain shareholder approval for what they characterize as a sale of core assets and talent. Groq and Nvidia’s public description, by contrast, presented the arrangement as a non-exclusive license with Groq continuing independently.
The plaintiffs acknowledge that Delaware case law has not directly decided whether an acqui-hire should be treated like a traditional merger or acquisition. Their complaint states: “No Delaware decision has directly answered the question this case raises.” The court’s response will determine whether that question gets a first clear answer in this dispute.