Groq raises $350 million
Startup Groq has secured $350 million in new funding as it shifts focus from making AI chips to running a neocloud service. This move sees the company pivoting from hardware production to providing powerful GPUs and infrastructure for artificial intelligence workloads.
Investment firm Disruptive leads the round, with Nvidia expected to join. The deal values Groq at $3.5 billion. This figure is lower than the $6.9 billion valuation reached last September, just before Nvidia hired founder Jonathan Ross and other senior staff under a licensing agreement.
A company spokesperson told TechCrunch that the drop in value does not constitute a down round. Instead, it represents a fresh valuation for the business operating after the Nvidia licensing deal.
Originally, Groq built its own chips, called LPUs, to challenge Nvidia on inference tasks. Those are the calculations needed to run AI in real time. After losing its key team members, Groq changed direction. It now operates Nvidia systems rather than just making chips, effectively becoming a customer of the company it once competed against.
In June, Groq raised $650 million to begin this transition. The firm plans to grow its capacity from 54 megawatts to over 200 megawatts by 2027.
Currently, Groq runs 13 data centres across North America, Europe, the Middle East, and Asia Pacific. It serves more than 6 million developers, enterprises, and AI-native companies. The new money will support clients using medium and larger clusters of Nvidia accelerated computing for training and inference.
Alex Davis, chairman of Groq and CEO of Disruptive, said: “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 rises as businesses scale their AI workloads, it is unclear if neoclouds will generate enough profit to justify their investment over the long term. CoreWeave reported strong revenue growth in the second quarter and recently signed major deals with Meta and Anthropic. Investors, however, remain worried about high spending on capital, heavy reliance on debt, and the risk of hardware losing value quickly. They also question the ability to turn growth into free cash flow.
Groq’s financial details remain private. Its pivot places the company directly inside Nvidia’s AI infrastructure ecosystem. This is not a unique arrangement among neoclouds. Nvidia supplies the GPUs powering clouds from CoreWeave, Lambda, and Nebius, while also investing billions into some of those firms as they race to build more capacity.
TechCrunch has asked Groq for further information.
