Record buyback fuels consecutive all-time highs

Shares briefly touch $240 during trading

Existing shareholders sue over Groq deal, citing rights violations

Nvidia CEO Jensen Huang [AP]
Nvidia CEO Jensen Huang [AP]

Nvidia is racing toward a $6 trillion market cap, setting consecutive all-time highs as growth in the AI market and a massive share buyback announcement send its stock surging.

Yet behind the rally, legal risks are mounting. Shareholders have filed lawsuits over what they describe as a backdoor acquisition of AI chip startup Groq.

Nvidia closed up 2.1 percent at $238.9 on the New York Stock Exchange on Monday (local time), marking a second straight record close. Shares briefly climbed as high as $240.1 during trading, setting another intraday all-time high.

The surge pushed Nvidia's market capitalization to approximately $5.76 trillion.

A further gain of about 3.8 percent — bringing shares to around $248 — would push the company's market cap above $6 trillion for the first time in history.

CNBC, analyzing options market pricing, said there is a 50 percent chance Nvidia crosses the $6 trillion threshold this month.

The probability of reaching that level this week was estimated at 13 percent, while the odds of achieving it by Dec. 18 were put at 67 percent.

Nvidia's share price has rebounded nearly 25 percent from its late-July low.

The buyback has been a key driver of the rebound. On Sept. 28, Nvidia announced a record increase in its buyback authorization, raising the limit by $150 billion.

The stock also gained momentum after US President Donald Trump met with Nvidia CEO Jensen Huang and other top AI industry executives.

Ben Emons, managing director at Highline Asset Management, called the buyback "a capital allocation that goes beyond simple shareholder returns — it demonstrates the company's conviction in the long-term demand for the AI industry."

As Nvidia's scale has grown, so have its legal risks. Former Groq engineer and shareholder Joshua Rubin and Benjamin Serebrin recently filed a lawsuit against Nvidia in the Delaware Court of Chancery.

The plaintiffs allege that Nvidia's effective acquisition of Groq violated the rights of existing shareholders. Both had left Groq before the deal was completed but still held shares in the company.

The plaintiffs argued that Groq's board bypassed a mandatory shareholder vote required under Delaware law and handed over the company without properly valuing or maximizing the assets being acquired.

They contend that Groq shareholders suffered billions of dollars in financial damages as a result. Groq said the claims are "entirely without merit" and that it would mount a vigorous defense.

The deal at the center of the dispute is a $20 billion non-exclusive licensing agreement signed in December last year, under which Nvidia acquired rights to Groq's language processing unit, or LPU, designed for AI inference.

In connection with the deal, Groq CEO Jonathan Ross, Chief Operating Officer Sunny Madra and between 150 and 200 engineers joined Nvidia.

The arrangement has drawn allegations in the industry that it amounted to a de facto acquisition structured to sidestep rigorous antitrust scrutiny. Members of the US Congress have also criticized the deal as a maneuver that undermines fair market competition, and the US Department of Justice has launched a probe into the matter.


jiyun@heraldcorp.com