What do AI companies do after non-acquisition deals in which rivals pay high intellectual property “licensing” fees to investors while poaching key talent? For AI chip maker Groq, the answer appears to be to raise more money from investors (which reportedly made a lot of money from its December deal with Nvidia), hire more talent, and pivot.
On Monday, Groq announced a new $650 million funding round, confirming previous reports. The raises come roughly six months after Nvidia entered into a non-exclusive license agreement for Groq technology and laid off founder and CEO Jonathan Ross, president Sunny Madra and other employees. Groq has not disclosed its new valuation. It was last valued at $6.9 billion after raising $750 million in September.
Originally from Google, Ross is known in the AI chip world for his contributions to the development of Google’s Tensor Processing Unit AI chip. He teamed up with another Google engineer, Doug Wightman, to launch Groq a decade ago. Wightman stayed on after the deal with NVIDIA and became CEO.
Groq created chips called language processing units (LPUs) used for inference and sold them as part of cloud services or on-premises hardware clusters.
Now that Nvidia owns the LPU IP, the GPU giant announced its own hardware cluster, the Nvidia Groq 3 LPX inference hardware system, at the GTC event in March.
In response to this, Groq reportedly shifted its focus to the neo-cloud business. The business was previously operated by Madra after Groq acquired AI data analytics company Definitive Intelligence in 2024. The company has grown to 13 data centers across North America, Europe, the Middle East, and Asia Pacific, serving over 5 million developers and thousands of AI companies, and processing trillions of tokens each week, the company said.
Groq is also hiring a replacement executive. The company has hired Alan Rice, who previously worked at xAI and Meta, as COO after a career in the U.S. Navy.
Entrepreneurial duo Sinclair Schuller will also join as CTO and Rakesh Malhotra as CPO. They previously worked together at Apprenda, an enterprise cloud software company founded by Schuler. The two then co-founded software engineering company Nuvalence, which was acquired by EY in 2024. Mr. Malhotra previously worked on Microsoft’s cloud products for about 10 years.
Groq’s success after its near-sale will depend on how competitive its inference cloud remains now that key hardware IP is shared with Nvidia. Certainly, there is a blow. Inference-related technologies are an area that is seeing significant demand (and VC investment). But at the same time, innovation and competition are also increasing.
Still, some people seem to have survived this type of transaction. Scale AI CEO Jason Droge told Forbes that Meta has seen a turnaround since making $14.3 billion in non-acquisitive hiring about a year ago, and that the company is on track to generate $1 billion in revenue.
In the high stakes game of AI, anything seems possible.
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