Groq raises $350M to pivot from AI chips to Nvidia-powered neocloud

Groq, a startup that previously built custom AI chips called LPUs, raised $350 million at a $3.5 billion valuation as it pivots to operating an Nvidia-powered AI inference cloud, the company told TechCrunch. The round was led by investment firm Disruptive, with planned participation from Nvidia. Groq’s valuation is down from $6.9 billion last September, a change the company frames as a new baseline for its "post-Nvidia-licensing-deal version" rather than a down round.

The funding follows a $650 million raise in June that Groq said would fund its transition from chipmaker to cloud provider. 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. The company plans to scale its data center capacity from 54 megawatts today to more than 200 megawatts in 2027.

Groq’s pivot began after Nvidia hired its founder and CEO, Jonathan Ross, and other top talent as part of a $20 billion licensing deal paid to investors. Groq now positions itself as "the world’s leading AI inference cloud," according to Alex Davis, chairman and CEO of Disruptive. The company says the fresh funds will support customers seeking "medium and larger sized clusters of Nvidia accelerated computing for training and inference."

The company’s financials remain private. Its strategy places it within Nvidia’s AI infrastructure ecosystem, joining competitors like CoreWeave and Lambda that also rely on Nvidia GPUs. While CoreWeave has reported strong revenue growth and major contracts, investors have raised concerns about high capital expenditures, heavy reliance on debt, and exposure to rapidly depreciating hardware.