Google Should Move To Acquire Groq
We said as much in our long-form report on Monday morning. The short version of the strategic rationale is that Groq’s LPUs are complementary to Google’s TPUs, and Groq’s valuation took a hit.
Groq founder Jonathan Ross started Google’s TPU effort back in 2013. The probability for this acquisition just grew significantly given that Groq now expects 2025 revenue to be somewhere north of $500 million, down from its previous $2 billion expectation.
It’s difficult to say how much of the Revenue shortfall is demand-related, how much is execution-related (difficult to scale Groq’s architecture), how much is pricing-related, and how much is competition from NVIDIA (NVDA has inference built into its GPUs). See the link above to our report in which we compare the processing performance of Groq’s LPUs with NVDA’s GPUs insofar as inference is concerned.
On the pricing model front, rather than exercise the freemium model, Groq would be wise to capture a portion of unit cost savings. It is a pricing model I have lived, have seen it work, and is simple - if your applications/products result in hard Dollar customer savings, the vendor deserves a portion of those savings (25% of savings is a good place to start). It is not a difficult conversation to have with prospects. It is easy for buyers and sellers to model out various scenarios.
Groq is working to raise money, and a potential sale ought to be part of that conversation.
We asked one of the LLMs to summarize information in the public domain about the Groq revenue miss as I don’t have a copy of Groq’s numbers to share. You may read that summary HERE.