Startup Groq has raised $350 million as it continues its transformation from AI chipmaker to neo-cloud company offering powerful GPU and AI infrastructure services.
The new capital, led by investment firm Disruptive and with expected participation from NVIDIA, values the company at $3.5 billion. That’s down from the $6.9 billion Groq was valued at last September, just months before Nvidia hired the startup’s founder and CEO Jonathan Ross and other top talent as part of a licensing deal.
A company spokesperson told TechCrunch that despite the difference in valuation, the company does not view this as a downgrade round, but rather as establishing a new valuation for the “post-NVIDIA licensing version of Groq.”
Groq focused on building its own chips, called LPUs (language processing units), to compete with Nvidia in inference, the type of computing needed to run AI workloads in real time. After losing its star team, Groq transitioned from a pure AI chip maker to a cloud and data center provider operating Nvidia systems, and the remaining Groq companies became Nvidia customers.
In June, Groq raised $650 million to launch its pivot. The company plans to expand from 54 megawatts to more than 200 megawatts by 2027.
Groq currently operates 13 data centers across North America, Europe, the Middle East, and Asia Pacific, serving more than 6 million developers, enterprises, and AI-native companies. Groq said the new funding will support “people looking to use Nvidia accelerated computing medium-sized or larger clusters for training and inference.”
“We are building Groq into the world’s leading AI inference cloud,” Alex Davis, Groq Chairman and Disruptive CEO, said in a statement. “Inference will undoubtedly be the largest and most important layer of AI infrastructure.”
The demand for inference is growing as enterprises expand their AI workloads, but an open question is whether neocloud will become a profitable enough business to benefit from significant investment in the long term. CoreWeave reported strong revenue growth in the second quarter and recently secured major deals with Meta and Anthropic. However, investors remained concerned about the company’s high capital expenditures, reliance on debt, exposure to rapidly depreciating hardware, and ability to convert growth into free cash flow.
Groq’s financials remain private for now, but the pivot puts the company directly into Nvidia’s AI infrastructure ecosystem. This is not a special relationship between today’s neo-clouds. Nvidia supplies the GPUs that power the CoreWeave, Lambda, and Nebius clouds, while investing billions of dollars in some of these companies as they compete to build out more capacity.
TechCrunch reached out to Groq for more information.
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