BofA Securities reiterated its Buy rating and $275 price target on NVIDIA Corp. (NASDAQ: NVDA), following news that privately held Groq entered into a non-exclusive licensing agreement for AI inference technology with NVIDIA.

Media reports suggested the potential agreement could be valued at up to $20 billion and could involve members of Groq's management team joining NVIDIA. BofA described the announcement as unexpected and highlighted that Groq's language processing unit technology differed materially from NVIDIA's core GPU architecture.

The analyst said the deal underscored NVIDIA's recognition that while GPUs dominate AI training workloads, the rapid expansion of inference may require more specialized hardware solutions. While incorporating different chip architectures could complicate future roadmaps and pricing, BofA said the move could allow NVIDIA to leverage its balance sheet and platform leadership to offer broader customer choice.

Overall, the firm said the agreement conceptually strengthened NVIDIA's competitive positioning against specialized ASIC providers and reaffirmed its view of NVIDIA as a top sector pick.