Groq has raised $350 million as it continues its transition from building its own AI chips to operating a neocloud that runs Nvidia hardware. The round, led by investment firm Disruptive with planned participation from Nvidia, values the company at $3.5 billion — a drop from the $6.9 billion valuation it held last September, shortly before Nvidia hired Groq's founder and CEO Jonathan Ross and other top talent as part of a $20 billion licensing deal paid out to investors.
A Groq spokesperson told TechCrunch that the company does not view the lower valuation as a down round, but rather as setting a new baseline for the "post-Nvidia-licensing-deal version of Groq." Groq originally focused on building its own LPUs (language processing units) to compete with Nvidia on inference. After losing its star team, it pivoted to becoming a cloud and data center provider that operates Nvidia systems.
In June, Groq raised $650 million to kick off the pivot. The company plans to scale from 54 megawatts of capacity to over 200 megawatts by 2027. It currently operates 13 data centers across North America, Europe, the Middle East, and Asia Pacific, serving more than 6 million developers and enterprises. Groq says the fresh funds will support customers seeking medium and larger clusters of Nvidia accelerated computing for training and inference.
"We are building Groq into the world's leading AI inference cloud," said Alex Davis, Groq's chairman and CEO of Disruptive, in a statement. "Inference will without a doubt become the largest and most critical layer of AI infrastructure."
While inference demand is high, it remains uncertain whether neoclouds can become profitable enough to justify heavy capital spending. CoreWeave reported strong Q2 revenue growth and landed major contracts with Meta and Anthropic, but investors remain concerned about its high capex, debt reliance, and hardware depreciation risks. Groq's financials are still private, and its pivot places it squarely inside Nvidia's ecosystem — a position shared by CoreWeave, Lambda, and Nebius, which also buy Nvidia GPUs and receive Nvidia investment as they expand capacity.
Source: TechCrunch