Groq raises $350M to fuel its pivot from AI chips to neocloud

Groq has raised $350 million in a round led by Disruptive, with planned participation from Nvidia, valuing the company at $3.5 billion. That is below its $6.9 billion valuation last September, before Nvidia hired founder and CEO Jonathan Ross and other senior employees through a $20 billion licensing deal that paid out Groq investors. Groq says the new valuation reflects a post-Nvidia-licensing-deal business rather than a down round. The company previously developed proprietary LPUs, or language processing units, to compete with Nvidia in inference—the computing required to run AI workloads in real time. After losing its star team, Groq shifted from a pure chipmaker to a cloud and data-center provider operating Nvidia systems. It raised $650 million in June to begin that transition and plans to expand capacity from 54 megawatts to more than 200 megawatts in 2027. Groq 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. The latest funds will support customers seeking medium and larger Nvidia accelerated-computing clusters for training and inference. Alex Davis, Groq’s chairman and CEO of Disruptive, said the company is building “the world’s leading AI inference cloud” and that inference will become the largest and most critical layer of AI infrastructure. Enterprise AI demand supports Groq’s strategy, but long-term profitability remains uncertain. CoreWeave reported strong second-quarter revenue growth and secured major contracts with Meta and Anthropic. Investors nevertheless remain concerned about its 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. Its pivot places it within Nvidia’s broader AI infrastructure ecosystem, a common relationship among neoclouds: Nvidia supplies GPUs to CoreWeave, Lambda and Nebius, while also investing billions in some of those companies as they build capacity.