UBS Group AG: NVIDIA Corporation (NVDA.US) partners with Groq LPU technology for 200 billion dollars, seizing the new track of AI high-speed inference.

UBS Group AG's report on "US Semiconductors and Semi Equipment SemiBytes: Our Thoughts on NVDA/Groq" was released on December 29, 2025. The report, completed by a team of six analysts, analyzed in depth the $20 billion non-exclusive licensing agreement reached between NVIDIA Corporation (NVDA.US) and Groq and its industry implications. The core of the deal is NVIDIA Corporation introducing Groq's Language Processing Unit (LPU) technology - a technology specifically designed for high-speed inference that uses 230MB of on-chip SRAM and 80TB/s bandwidth to address the latency issues caused by traditional GPUs accessing off-chip HBM (288GB capacity, 3.35TB/s bandwidth). It is claimed to achieve over a 7.5 times increase in inference throughput. Key management personnel from Groq, including the founder and former Google TPU developer, will join NVIDIA Corporation to drive technology integration. Groq will continue to operate independently and provide GroqCloud cloud services to support models like Llama3 and Mistral 8x7B. From a market strategy perspective, this collaboration allows NVIDIA Corporation to enter the high-speed inference application marketa fast-growing sector within the inference market, although not traditionally a GPU strength. The technical integration will complement NVIDIA Corporation's existing product line: the LPU technology is planned to integrate into the AI Factory architecture with Rubin CPX (Long Context Window Inference Accelerator) and Dynamo (Multi-Tenant Rack Operating System) to build an expansion framework of "single platform + system-level product portfolio" targeting a wider range of LLM ultra-low latency application scenarios. In terms of financial forecasts, UBS Group AG believes that the upward momentum in stock price mainly comes from the increase in earnings per share (EPS). It is expected that the price-earnings ratio will remain around 20 times in 2026, corresponding to market expectations of EPS of approximately $9-9.50 for 2026, with a focus on visibility for 2027. Valuation is based on multiples such as price-earnings ratio (P/E) and enterprise free cash flow (EV/FCF), with clear identification of risk factors such as macroeconomic fluctuations, international trade interruptions, technological disruptions, innovation in business models, as well as specific challenges from competition from AMD, intense competition in the ARM application processor field, and emerging competition from Intel. The report also discloses that UBS Group AG has released a comprehensive 180-page analysis PowerPoint on the outlook for the US semiconductor industry in 2026, covering market commentary, forecasting models, popular research, individual stock investment arguments/risk points, and emphasizing that investors should consider this report as one of the decision-making factors, while noting the potential conflicts of interest due to business relationships. Overall, UBS Group AG is positive about NVIDIA Corporation, believing that this deal will strengthen its competitiveness in the high-speed inference market and expand market share through a system-level product portfolio, but also cautioning that relevant risk factors need to be carefully evaluated.