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

Groq has raised $350 million as it continues to pivot from an AI chipmaker to a neocloud company providing GPU and AI infrastructure services, TechCrunch reports.

The round was led by investment firm Disruptive, with planned participation from Nvidia, and values the company at $3.5 billion — down from the $6.9 billion valuation Groq held last September, shortly before Nvidia hired founder and CEO Jonathan Ross and other top talent as part of a licensing deal.

A company spokesperson told TechCrunch that Groq does not see the lower figure as a down round, but rather as establishing a new valuation for the "post-Nvidia-licensing-deal version of Groq."

Groq originally built its own inference chips, dubbed LPUs (language processing units), to compete with Nvidia. After losing its star team, it shifted to operating Nvidia systems as a cloud and data center provider, turning the company into an Nvidia customer.

The pivot began in June with a $650 million round. Groq says it plans to scale from 54 megawatts to more than 200 megawatts by 2027, and currently runs 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 fresh funds will support "those seeking usage of medium and larger sized clusters of Nvidia accelerated computing for training and inference," Groq said. "We are building Groq into the world's leading AI inference cloud," said Alex Davis, Groq's chairman and CEO of Disruptive. "Inference will without a doubt become the largest and most critical layer of AI infrastructure."

Inference demand is surging as enterprises scale AI workloads, but it remains an open question whether neoclouds will be profitable enough to justify their considerable investment. CoreWeave posted strong second-quarter revenue growth and recently landed major contracts, including with Meta and Anthropic, yet investors still worry about its high capital expenditures, heavy reliance on debt, and exposure to rapidly depreciating hardware.

Groq's financials remain private for now, and its pivot puts the company squarely inside Nvidia's AI infrastructure ecosystem, much like CoreWeave, Lambda and Nebius — all of which run Nvidia GPUs and receive Nvidia investment. The question ahead is whether Groq can turn its capacity build-out into margins in an increasingly crowded inference cloud market.