Former Groq Engineers Sue Over Nvidia's $20 Billion Deal, Saying the Board Skipped the Stockholder Vote

A Delaware lawsuit filed on October 2 is taking aim at the structure behind one of the most consequential AI chip deals of the past year: Nvidia's roughly $20 billion agreement with inference startup Groq. Two former Groq engineers, Joshua Rubin and Benjamin Serebrin, filed the case at the Delaware Court of Chancery. Both left the company before the deal was announced, but according to the complaint, they still hold Groq stock — and they argue that stock was cashed out at a "lowball" price.

The transaction, announced in December 2025, was not a traditional acquisition. Nvidia agreed to pay about $20 billion in two parts: $17 billion for a license to Groq's low-latency inference technology that the suit notes was labeled "non-exclusive," and roughly $3 billion in Nvidia restricted stock units set aside for the approximately 150 to 200 Groq engineers who moved to Nvidia as part of the deal. Groq founder and CEO Jonathan Ross and president Sunny Madra were among the senior leaders who joined the chip giant. Groq itself continues as an independent company and has raised about $1 billion since June from investors including Nvidia.

That structure is the heart of the complaint. Rubin and Serebrin allege that Groq's board "sold the company to Nvidia without the stockholder vote Delaware law requires and without any process designed to test or maximize the value of what Nvidia bought." The suit further alleges that $3 billion in RSUs went only to the employees who made the move, while investment funds that designated members of Groq's board "enjoy windfall returns from the later squeeze-out" — making "a Board majority ... conflicted as a result." In the plaintiffs' words, "The Board's conflicted choice cost Groq's stockholders billions of dollars."

There is also a tax wrinkle. Because the transaction was structured as a license rather than a merger, the plaintiffs note that the $17 billion payment is treated as taxable income for Groq rather than as consideration for the sale of the company — a detail that shapes how the money flows and who ultimately bears the cost.

The deal was framed from the start as a talent-and-IP lift rather than a buyout. In an email to employees obtained by CNBC around the time of the announcement, Nvidia CEO Jensen Huang wrote that Nvidia planned "to integrate Groq's low-latency processors into the NVIDIA AI factory architecture, extending the platform to serve an even broader range of AI inference and real-time workloads." He added: "While we are adding talented employees to our ranks and licensing Groq's IP, we are not acquiring Groq as a company."

Groq rejects the premises of the suit outright. "Our licensing agreement with NVIDIA delivered exceptional value for Groq, our investors, and our employees," a company spokesperson told CNBC, adding, "This lawsuit is meritless and we will vigorously defend ourselves against it." Nvidia has been approached for comment.

The case matters well beyond one startup's cap table. License-and-acqui-hire structures have become the preferred way for the largest AI companies to absorb teams and technology without triggering a merger review — and without the shareholder protections a full acquisition carries. If the Delaware court agrees that a board can route most of the value through employee RSUs and insider-aligned funds while outside stockholders receive what they call a take-it-or-leave-it payout, expect the template to spread. If it doesn't, every future AI-chip deal of this shape will need a real market check — and a real vote.