Groq secures $350M as it shifts from chipmaking to Nvidia-powered cloud services

AI startup Groq has raised $350 million in fresh funding, marking another step in its transition from building its own chips to operating as a neocloud provider that runs Nvidia systems. The round was led by investment firm Disruptive, with Nvidia planning to participate, and values the company at $3.5 billion. That figure is lower than the $6.9 billion valuation Groq held last September, shortly before Nvidia hired founder and CEO Jonathan Ross and other key staff as part of a $20 billion licensing deal paid out to investors.

A company spokesperson told TechCrunch that Groq does not view the new valuation as a down round, but rather as setting a fresh benchmark for the company after the Nvidia licensing agreement. Groq originally designed its own chips, called LPUs, to compete with Nvidia on inference - the computing power needed for real-time AI workloads. After losing its top team, Groq pivoted to offering cloud and data center services using Nvidia hardware.

In June, Groq raised $650 million to begin that shift. The company now operates 13 data centers across North America, Europe, the Middle East, and Asia Pacific, serving over 6 million developers and enterprises. Groq plans to grow from 54 megawatts of capacity to more than 200 megawatts by 2027. The new funds are intended to support customers needing larger clusters of Nvidia accelerated computing for training and inference.

Alex Davis, Groq's chairman and CEO of Disruptive, said in a statement: "We are building Groq into the world's leading AI inference cloud. Inference will without a doubt become the largest and most critical layer of AI infrastructure."

While demand for inference is high, whether neoclouds can become profitable enough to justify their heavy investments remains uncertain. CoreWeave posted strong second-quarter revenue and landed major deals with Meta and Anthropic, but investors still worry about its high capital spending, debt reliance, and hardware depreciation. Groq's financials are private, but its pivot places it firmly within Nvidia's AI ecosystem - a position shared by other neoclouds like CoreWeave, Lambda, and Nebius, all of which buy Nvidia GPUs and receive Nvidia investment. TechCrunch has contacted Groq for further comment.

Source: TechCrunch