TheChek News Flow

It’s been more than a month since Nvidia entered an agreement, made public on Christmas Eve, to license the technology of chip startup Groq and hire its top executives including CEO Jonathan Ross. Now the terms of the deal are coming into focus.

Groq told shareholders last month it expected to receive $17 billion in cash from Nvidia based on the licensing agreement, paid out in three installments by the end of this year. This month, Groq shareholders received $7.6 billion of that amount, according to an email the company sent to them.

The payout, at $64 a share, is roughly twice what investors paid to buy shares in a $750 million September funding round led by Dallas-based firm Disruptive. That certainly is a good outcome for those investors, which include Blackrock and Neuberger Berman as well as smaller investors such as 1789 Capital, the firm that employs Donald Trump Jr.

Groq’s payout is roughly in line with what other startups have returned to shareholders following similar licensing deals, which have become popular forms of quasi-acquisitions that have allowed companies to largely avoid antitrust scrutiny. Investors in the last funding round for Character.AI were slated to get about 2.5 times the price they paid for their shares after Google agreed to a similar licensing deal. Microsoft was expected to pay a 1.1 times multiple to investors in Inflection AI’s final round of funding as part of another such deal.

Of course, earlier investors in Groq like Chamath Palihapitiya’s Social Capital stand to make much bigger returns. Groq sold shares for as little as 97 cents each in its Series A round of funding led by Social Capital, according to the company’s incorporation document.

Stockholders in Groq, including employees with vested stock, can expect more payments. From the $17 billion in cash Nvidia is paying Groq, shareholders can expect to get about $10.3 billion in total proceeds, according to information Groq provided to stock owners last month.

This initial $7.6 billion payout represents three-quarters of the Groq stock ownership. Shareholders will get the additional payments, of about $2.7 billion, when the company redeems the rest of the shares, though Groq hasn’t yet told them when that will happen, said a person close to the company.

Uncle Sam and Groq employees will get the rest. Groq will have to pay taxes on the licensing payments from Nvidia. U.S tax law treats licensing fees as ordinary corporate income, which is taxed at a 21% rate. Groq’s home state of California takes another 8.8% on top of that.

Groq has also paid out unexercised options held by employees, said the person close to the company, taking another chunk out of the Nvidia cash. It’s unclear what other payments the deal’s $20 billion headline figure could include. Nvidia did not respond to requests for comment.

Groq has also told shareholders they can expect additional payouts from a sale or winding down of the company, and the board is considering all possible options. So far, a buyer hasn’t emerged, but it’s possible one of Nvidia’s competitors would want to acquire Groq’s intellectual property to prevent others from accessing it in the future.

Saudi Arabia appoints new investment minister

Riyadh is seeking to increase the amount of foreign capital coming to the kingdom as part of its modernisation plan

Saudi Arabia has replaced Khalid al-Falih as investment minister, at a time when Riyadh is stepping up its efforts to attract increased foreign capital to back Crown Prince Mohammed bin Salman’s ambitious plans to modernise the kingdom.

Falih, who had been in the post since 2020 and is one of the country’s highest-profile cabinet members, is succeeded by Fahad Al-Saif, a former HSBC banker who is head of investment strategy at the Public Investment Fund, as well as the near $1tn sovereign wealth fund’s economic insights division.

The shake-up comes as Riyadh is reassessing its massive spending priorities and scaling back projects as it seeks to manage tightening liquidity and a widening budget deficit, while focusing on hard deadlines as it prepares to host the Expo 2030 trade fair and the 2034 football World Cup.

Since Prince Mohammed launched his plans to transform the kingdom and diversify its oil-dependent economy a decade ago, Riyadh has struggled to attract the levels of foreign direct investment it desired, a task that fell within Falih’s remit.

Riyadh has set a target of attracting $100bn of FDI annually by 2030. In 2024, FDI hit $32bn, up from $25.6bn the previous year, according to government statistics.

Falih, an oil veteran, has long been one of Saudi Arabia’s highest-ranking officials and best-known ministers on the global stage.

He endured a brief fall from grace in 2019, when he was removed from a super-ministry that straddled energy, industry and mining after he had taken a cautious approach to the listing of Saudi Aramco, the state-owned energy company.

But he bounced back the following year when Prince Mohammed appointed him investment minister, and he oversaw a push to convince multinationals to move their regional headquarters to the kingdom.

Under the policy, known as “regional HQ programme”, companies were warned that they risked losing out on lucrative government contracts if they did not shift their regional office to Saudi Arabia. More than 600 firms had since agreed to make the move, Falih said in October.

Falih has now been appointed a minister of state, and continues to be a member of the cabinet, according to the Saudi state news agency, although his exact role is unclear.

Saif has held senior roles at the PIF, which is chaired by Prince Mohammed and has been tasked with spearheading his development plans for the kingdom since 2021.

He has overseen the rollout of the PIF’s debt programme and been involved in formulating the fund’s long-term investment strategy.

Before joining the PIF, he was an adviser to finance minister Mohammed al-Jadaan, and the first chief executive of the kingdom’s National Debt Management Centre.

Deal will reduce American tariffs on a range of Taiwanese food products

The US and Taiwan have agreed to reduce tariffs on a range of food imports and other products as they officially signed a trade agreement on Thursday.

Donald Trump last week announced that the US would slash tariffs on Taiwan to 15 per cent in exchange for a $250bn investment in the US chip industry, as Washington moves to secure semiconductor supply chains and boost investment in American manufacturing.

The move brings duties on Taiwanese products in line with those levied on Japan and South Korea, and comes with a US promise to waive tariffs on generic drugs, aerospace parts and natural resources unavailable in the US.

The agreement also ends a disadvantage for Taiwan as its new bilateral tariff rate puts it on a par with other important US trading partners.

According to the full text of the deal, the US will remove the “reciprocal” tariffs on some imports from Taiwan including fruits, spices and coffee.

The Trump administration has already moved to exempt many agricultural products from its broader reciprocal tariffs as part of efforts to control grocery prices for US consumers.

The text of the deal contained large purchasing commitments from Taiwan, which has agreed to spend $44.4bn on liquefied natural gas and crude oil, $15.2bn on civil aircraft and engines, and $25.2bn on power equipment over the next three years. 

Taiwan also agreed to reduce tariffs on US goods, including on autos and auto parts, chemicals, seafood, machinery, health products, electrical products, metals and minerals, as well as many US agricultural products.

US trade representative Jamieson Greer said the agreement would “significantly enhance the resilience of our supply chains, particularly in high-technology sectors”.

Greer added it would also “eliminate tariff and non-tariff barriers facing US exports to Taiwan, furthering opportunities for American farmers, ranchers, fishermen, workers, small businesses and manufacturers”.

Companies are taking big losses and making moves to reduce electric-vehicle capacity amid regulatory changes and cooling demand

U.S. automakers have been pumping the brakes on their electric-vehicle businesses for months, and the costs are piling up.

Following years of investments into EV technology, the Detroit Big Three—General Motors GM 0.14%increase; green up pointing triangle, Ford Motor F 1.08%increase; green up pointing triangle and Jeep-maker Stellantis STLA 3.67%increase; green up pointing triangle have announced more than $50 billion in combined write-downs.

EV sales fell more than 30% in the fourth quarter, after a $7,500 federal tax credit that had juiced U.S. sales expired in September. Demand cratered for the highest-profile EVs, from Tesla’s TSLA -2.62%decrease; red down pointing triangle Cybertruck to Ford’s much-hyped electric pickup. Automakers expect demand to remain muted.

GM, which is forging ahead with much of its EV strategy, albeit at a smaller scale, didn’t have as much to cancel and write down. The company, for instance, still aims to build big EV trucks. Ford, meanwhile, is changing course.

“Instead of plowing billions into the future knowing these large EVs will never make money, we are pivoting,” Ford Chief Executive Jim Farley has said. Ford now says it will make one low-cost EV pickup by 2027.

Automakers’ retreats and massive write-downs have come as Republican lawmakers abolished a lucrative federal tax credit for EVs last fall, while also doing away with federal fuel-efficiency mandates. Even with federal support, EV demand was below expectations.

Now, auto companies and battery makers are scaling back. After pouring hundreds of billions of dollars into U.S. manufacturing, they are downsizing investments, canceling projects and pivoting plants to support making more traditional gas-powered vehicles.

The net effect of all the cancellations: More than $20 billion in previously announced investments in EV and battery facilities were wiped out last year, according to Atlas Public Policy, which tracks clean-economy investments. That drove the first net annual decrease in announced investments in years.

GM laid off thousands of workers at plants across Michigan, Ohio and Tennessee and has blown up plans for factories to make EV trucks and motors. Instead, those plants will build gas-powered trucks and V-8 engines. Ford dissolved a joint venture with a South Korean conglomerate to make EV batteries in America. Stellantis is unloading its stake in a battery-making business.

When Stellantis booked the largest charge taken by any automaker related to electric-vehicle bets so far, Chief Executive Antonio Filosa said the pace of the energy transition had been overestimated and “distanced us from many car buyers’ real-world needs, means and desires.”

Outside of the U.S., EV markets are still growing. China’s BYD 1211 -1.27%decrease; red down pointing triangle recently ​replaced Tesla ​as the world’s biggest EV seller, even though some countries have put tariffs on Chinese EVs.

BYD delivered more than one million vehicles outside of China last year—double what it delivered in 2024. But at home, its sales growth slowed amid steeper competition and a reduction in state subsidies for affordable vehicles.

A news release touting AI technology to boost trucking efficiency appears to have triggered a selloff that cost investors billions

Algorhythm Holdings’ AI technology announcement caused a market selloff, wiping out billions in market value from trucking and transport stocks.

The Dow Jones Transportation Average fell 4%, its biggest daily decline since April, with 17 of 20 companies ending lower.

Algorhythm, formerly Singing Machine Co., has a market value under $3 million and its SemiCab unit claims to reduce empty freight miles.

Trucking and transport stocks had one of their worst days ever Thursday thanks to a firm that until recently was in the karaoke business.

The Florida firm, formerly the Singing Machine Co. RIME 29.87%increase; green up pointing triangle and now known as Algorhythm Holdings, published a news release shortly before stock trading opened touting AI technology capable of increasing trucking efficiencies. Algorhythm, which has a stock market value of less than $3 million, hasn’t landed any software clients in the U.S. yet. But its announcement nonetheless rattled the market.

By midday, logistics firms were down more than 20% in some cases. They recovered somewhat as traders and analysts zeroed in on the source of the panic. Yet billions of dollars in market value were wiped out by the closing bell.

Freight broker C.H. Robinson Worldwide CHRW -14.54%decrease; red down pointing triangle dropped 15% and third-party logistics provider Landstar System LSTR -15.60%decrease; red down pointing triangle fell 16%, its worst day ever. Trucker J.B. Hunt Transport Services JBHT -5.06%decrease; red down pointing triangle and logistics firm Ryder System R -4.28%decrease; red down pointing triangle ended 5.1% and 4.3% lower, respectively. Even firms that don’t have much to do with trucking were hit. Expeditors International of Washington, which arranges air and ocean shipping, declined 13%. Airlines and railroads were also caught in the frenzy.

C.H. Robinson said it has been an AI leader for more than a decade and remained confident in its strategy and share buyback plans.

“We believe AI will only continue to strengthen our performance and widen our competitive moat,” it said.

The Dow Jones Transportation Average, which includes those companies and had surged to records with the broader market, fell 4%. It was the biggest daily decline since April, when President Trump’s barrage of tariffs shook markets, for the group of stocks that investors watch as a leading indicator of economic activity. Of the 20 companies in the index, 17 ended the day lower, collectively shedding $17.4 billion of market value.

The selloff is one of the most extreme examples yet of the sell-now, ask-later ethos sweeping financial markets in the artificial-intelligence era. In recent sessions, concerns about the technology’s disruptive potential have rocked shares of private-credit firms, wealth advisers, insurance brokers, and providers of legal and financial data, to name a few.

“People are looking for an excuse to sell, and maybe this was it,” said Brendan Hopkins, who works in investor relations for Algorhythm. “Some of these companies that sold off, they would be beneficiaries.”

Hopkins said the company was shocked by the attention received by the news release, as well as the market reaction. His phone rang nonstop with analysts from Wall Street banks and financial firms around the world. So many people went to Algorhythm’s website to download the white paper promoted in the news release that the site crashed, and few could actually read the 10-page note.

Algorhythm said in its release that the AI technology of its SemiCab unit can greatly reduce empty freight volumes, which occur after a truck delivers its cargo and moves on to its next location empty. The company said its technology “is enabling its customers’ internal operations to scale freight volumes by 300% to 400% without a corresponding increase in operational head count.”

Until recently, the company’s business was selling karaoke machines, according to securities filings. As smartphone apps and new televisions with karaoke features began to disrupt that business, the Singing Machine assets were sold for $500,000. Chief Executive Gary Atkinson went looking for a new business.

He found it in India, where SemiCab, an Atlanta-based business, was using AI to optimize trucking routes for companies. One of the holy grails of trucking is to find a way to reduce the one-third of trips that big rigs are believed to spend hauling empty trailers. SemiCab says its technology reduced so-called deadhead miles by 70%.

SemiCab founder and CEO Ajesh Kapoor said the firm is facilitating thousands of loads a month in India. By comparison, C.H. Robinson manages more than 100,000 shipments a day.

In the U.S., SemiCab is only beginning to sign up customers. Atkinson said he was surprised the white paper sent a shock wave across the transport sector. “When names like C.H. Robinson are dropping billions of dollars of market cap, it’s quite staggering,” he said.

As other trucking stocks tanked Thursday, Algorhythm’s volatile stock surged, ending Thursday 30% higher at $1.08.

“Obviously we’re happy,” said Hopkins. “No publicity is bad publicity.”

Killing of thousands of protesters creates fracture within the country’s political system

Iran’s theocratic rulers are extending their clampdown beyond the streets and into the broader political sphere, targeting politicians who took a stand against the bloody crackdown on protesters.

At least seven members of Iran’s reformist movement—designed to change the Islamic Republic from within—were arrested in recent days, including its leader. The arrests come as the realization that Iranian security forces carried out one of the biggest waves of political killing in recent history creates fractures within the country’s political system. That has prompted many in the reformist camp to stake out much bolder positions against the regime, putting them at risk.

Members of the Reformist Front—an umbrella group for reformist parties and a key backer of Iranian President Masoud Pezeshkian in the last presidential election—broke ranks recently with the government’s official line that the deaths were the work of rioters and terrorists and condemned the killings.

“We declare our disgust and anger at those who ruthlessly and recklessly brought blood and dirt to the youth of this land,” Azar Mansouri, the leader of the Reformist Front, who has become increasingly critical of Iran’s rulers in recent years, said on Telegram. “No power, no justification, and no time can cleanse this great tragedy.”

In a separate post earlier this month, Mansouri said efforts to reform the regime from the inside had failed.

A few days later, on Feb. 8, she was arrested by members of the intelligence unit of the Islamic Revolutionary Guard Corps, according to the Reformist Front.

Iran’s Mission at the United Nations in New York declined to comment. Fars News, affiliated with Iran’s IRGC, said the detained reformist politicians were part of a subversive ring aligned with the country’s enemies. Without naming the individuals, the report said they face accusations that include undermining national unity and planning to incite social and political forces against the Islamic Republic.

“Those who issue statements against the Islamic Republic from within are echoing the voices of the Zionist regime and America,” judiciary chief Gholamhossein Mohseni Ejei said on social media after the arrests.

Two of the detained reformist leaders—Javad Emam, the Reformist Front’s spokesman and Ebrahim Asgharzadeh, the head of its political committee—were released on bail on Thursday, according to Iranian state media.

Blair think-tank calls for end to ban on new UK North Sea licences

Institute says new oil and gas exploration is needed to protect workers and slow the decline of the basin

Sir Tony Blair’s think-tank has called on the UK government to reverse its ban on new North Sea exploration licences and scrap the windfall tax on the oil and gas sector. 

The Tony Blair Institute for Global Change, which is chaired by the former Labour prime minister, said new oil and gas exploration was needed to protect workers and slow down the decline of the basin. 

It added that the windfall tax on the sector — which was introduced by the Conservative government in 2022 and extended by Labour — has deterred long-term investment and it should be “brought to an orderly close”. 

“This is not about slowing the [energy] transition or denying the direction of travel,” it added. “It is about making the transition governable. An energy strategy that ignores revenue security and political consent in pursuit of symbolic purity will not endure — and it will not deliver the climate outcomes it promises.”

The call is part of a TBI report published on Friday, which reiterates the think-tank’s criticisms of the UK government’s race to decarbonise Britain’s power sector by 2030, led by energy secretary Ed Miliband. 

In a wide-ranging critique, the report argues that current energy policy is pushing up costs and making Britain uncompetitive at a time when China and the US are both pursuing “energy abundance”, albeit in different ways. 

Calling for a reset of energy policy while keeping the UK’s overall goal to decarbonise by 2050 intact, it adds: “The UK’s real climate contribution lies not in the arithmetic of its emissions reductions, but whether it can demonstrate a model of decarbonisation that others have an incentive to follow — cutting emissions while keeping energy affordable, economies competitive and public consent intact.”

Blair led Labour to three successive general election victories and remains an influential figure in the Labour Party. Sir Keir Starmer as party leader and prime minister surrounded himself with many “Blairites”, including several veterans from the last New Labour government.

However, that wing of the party has seen its power diminished in the fallout of the Lord Peter Mandelson scandal and the departure of a number of previously senior Blairite figures in Starmer’s team in recent weeks.

The think-tank’s paper puts it more closely aligned with the energy strategy of the Conservative Party, which has also said it will scrap the windfall tax, allow new exploration drilling and take a slower approach to decarbonising the power sector. 

The TBI has worked closely with petrostates the United Arab Emirates and Azerbaijan. A spokesperson said its work on net zero and energy was grounded in facts and data, adding: “Global fossil fuel demand has not disappeared, and energy security, affordability and decarbonisation must be addressed together.”

The current ban on new exploration licences in new fields in the North Sea was an election manifesto pledge of the current Labour government as part of its push to move the UK towards lower carbon forms of energy, primarily offshore wind turbines.

Ministers said in November that oil and gas drillers would be allowed to develop new fields next to existing ones, insisting this is in line with their commitment. The windfall tax is due to expire in 2030, unless oil and gas prices fall below a threshold before then.

A spokesperson for the government’s Department for Energy and Net Zero said: “The route to energy sovereignty, lower bills and thousands of good jobs in our communities is becoming a clean energy superpower.”

They argued that issuing new licences to explore new fields would “not take a penny off bills, cannot make us energy secure and will only accelerate the worsening climate crisis”.

From Nick Baldwin, Managing Director, Valuations & Opinions, Lincoln International, London WC2, UK

The Lex column on the “SaaSpocalypse” (“Private equity’s software bets are caught in the maelstrom”, Lex, February 11) rightly highlights the valuation shock facing software-heavy private equity portfolios, but it risks overstating the implications for private credit.

For lenders active in European private markets, the disruption caused by artificial intelligence is neither especially new nor unpriced.

AI risk has been a core underwriting consideration since late 2022, particularly for software and technology businesses. With the greater influence of AI, narrow tech solutions face genuine displacement risk, while broader platforms, so-called ERP cloud-based systems and bundled services that integrate AI are often net beneficiaries. Treating “software” as a monolith obscures this distinction.

Private credit’s relative resilience also reflects the asset class’s structure. Technology businesses typically carry the largest equity cushions in the market, offering meaningful downside protection even as enterprise value multiples compress. Private credit has both the flexibility and capital to support fundamentally sound companies through periods of volatility.

AI will undoubtedly create further moments of market noise as the technology evolves. But for disciplined private lenders focused on cash flow durability rather than exit timing, the challenge is one of selectivity rather than systemic stress.

In that sense, today’s repricing looks less like a reckoning for private credit and more like a long-anticipated sorting process.

Nadella has been waiting for such a moment. He said on the BG2 podcast in late 2024 that over time, traditional software applications will “collapse in the agent era” because they are “essentially … databases with a bunch of business logic.”

A lot has to happen before these agents become widely used. The newfangled browser- and computer-using agents still carry enormous security liabilities because they can inadvertently disclose a user’s credentials or enable a remote attacker to take control of PCs. And some AI buyers say these products are far too difficult to use.

Some of the companies are making bolder claims about how ready these types of agents are to be used in the workplace. While OpenAI, Anthropic, and Google said their computer-using agents are only available in research previews, implying they aren’t ready for large enterprises to adopt, vendors like SAP and ServiceNow—which rely on models from AI firms including OpenAI and Anthropic—have said their computer-using agents are generally available.

Meanwhile, OpenAI and Anthropic are ratcheting up the pressure. On Tuesday, Anthropic made Cowork available in a research preview to Windows computer customers. Microsoft has spent months developing similar tools that could take over Windows tasks and has previewed some of those features.

Last week OpenAI launched Frontier, which aims to help businesses such as Uber and Thermo Fisher Scientific create multiple AI co-workers and assign them different tasks that involve pulling in data from various applications.

OpenAI didn’t specify which well-known enterprise apps its AI would use to perform these tasks. But it included a graphic in its blog post about Frontier, showing how its technology for directing these agents would sit on top of companies’ “systems of record.” That’s a reference to applications made by firms such as Microsoft and Salesforce that store critical corporate data.

Some executives at traditional enterprise application firms said they viewed OpenAI’s Frontier graphic as the company’s way of showing the heavy influence it wants to have over how businesses use and pay for software and AI.

So far, traditional enterprise app firms such as Salesforce or Microsoft don’t appear to be preparing to outright block these new AI agents from using, tapping or modifying data in major existing apps like Salesforce’s customer relationship management software or Microsoft’s Office 365 productivity app suite.

Nadella, in the 2024 podcast, said there wasn’t much his firm could do to stop someone from using an AI agent from accessing applications on the company’s Windows-powered devices.

But some executives in the AI field believe the enterprise app firms could try to limit how frequently AIs can access the apps or the data they store. A version of this happened last spring when Salesforce’s Slack chat app prevented other AI and software companies from searching or storing Slack messages even if their customers permit them to do so.

Ironically, many of the traditional enterprise firms have been powering their own agents with technology they purchased from OpenAI and Anthropic, even as those AI firms try to convince workers to use their own competing tools and apps. (Those include premium versions of ChatGPT and Claude chatbots, which workers can use to access traditional enterprise apps and automate tasks involving spreadsheets or CRMs.

Last fall, for instance, database firm Snowflake released a product powered by models from those AI firms to help its customers develop agents that can search for and get data on their sales or other corporate metrics. The agents tap information that resides in Snowflake databases or in apps such as Microsoft Teams and those of Salesforce and SAP.

Because AI is breaking down traditional barriers and enabling new competition, leaders of software firms feel like “either they go to a $1 trillion valuation or they go to zero,” Snowflake CEO Sridhar Ramaswamy said at the time.

For their part, AI customers say there’s a growing need for tools that manage and connect AI agents, but they’re cautious about where to spend money.

“When I look at Salesforce and Oracle and all the other agents that I need to bring together, there’s a conversation happening of who manages that data, where does it reside, do we need to have multiple agents bringing it together and controlled by one superagent—these are all active discussions,” said Onkar Birk, chief technology officer of Hilton Grand Vacations, a time-share rental firm with more than $5 billion in annual revenue.

So far, the company has relied on a mix of AI products from OpenAI, Microsoft, Salesforce, Oracle and other vendors to run internal agents that automate tasks like forecasting revenue and staffing needs. It has also launched an AI agent powered by software from Cresta, a startup whose product is powered in part by OpenAI and Anthropic technology, to answer customers’ questions about which properties are available to book.

Despite the abundance of new AI agent products, Birk said he’s not rushing to sign up for new subscriptions.

“It’s easy to say this is simple, but it’s really not—it takes a lot of time to get results,” Birk said, noting that the company spent nearly three years developing its customer support agent before launching it to customers. “This is not a simple architecture to invest in.”