Everybody has a theory about why Nvidia dropped $20B on Groq - they're mostly wrong

This summer, AI chip startup Groq raised $750 million at a valuation of $6.9 billion. Just three months later, Nvidia celebrated the holidays by dropping nearly three times that to license its technology and squirrel away its talent.

In the days that followed, the armchair AI gurus of the web have been speculating wildly as to how Nvidia can justify spending $20 billion to get Groq’s tech and people.

Pundits believe Nvidia knows something we don't. Theories run the gamut from the deal signifying Nvidia intends to ditch HBM for SRAM, a play to secure additional foundry capacity from Samsung, or an attempt to quash a potential competitor. Some hold water better than others, and we certainly have a few of our own.

What we know so far

Nvidia paid $20 billion to non-exclusively license Groq's intellectual property, which includes its language processing units (LPUs) and ...