Groq raises $350M as it pivots from AI chips to neocloud

Startup Groq has raised $350 million as it continues to pivot from an AI chipmaker to a neocloud company that provides powerful GPUs and AI infrastructure services. The new capital, led by investment firm Disruptive with planned participation from Nvidia, values the company at $3.5 billion — 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 $20 billion licensing deal the company paid out to investors.

A Groq spokesperson told TechCrunch that despite the difference in valuation, the company doesn’t see it as a down round, but rather as establishing a new valuation for the “post-Nvidia-licensing-deal version of Groq.”

Groq was focused on building its own chips, dubbed LPUs (language processing units), to compete with Nvidia on inference — the compute needed to run AI workloads in real time. After it lost its star team, Groq shifted from a pure AI chipmaker into a cloud and data center provider that operates Nvidia systems. In June, Groq raised a $650 million round to kick off its pivot, and it intends to scale from 54 megawatts to more than 200 megawatts in 2027.

Today, 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. Groq says the fresh funds will support “those seeking usage of medium and larger sized clusters of Nvidia accelerated computing for training and inference.”

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

While inference is in high demand as enterprises scale AI workloads, it’s an open question whether neoclouds will be profitable enough to provide returns on their considerable investment long term. CoreWeave reported strong second-quarter revenue growth and recently landed major contracts, including with Meta and Anthropic, though investors remain concerned about its high capital expenditures, heavy reliance on debt, and exposure to rapidly depreciating hardware.

Groq’s financials are still private, but its pivot puts it directly inside Nvidia’s AI infrastructure ecosystem — not a unique position, since Nvidia also supplies GPUs to CoreWeave, Lambda, and Nebius while investing billions into some of those companies.

Why it matters

Groq’s reversal — from challenging Nvidia’s chips to reselling Nvidia’s compute — illustrates how hard it has become for AI-chip startups to compete directly with Nvidia, even for a company that once built its own silicon.