Groq raises $350m and pivots from chips to an AI cloud business

Groq, the AI chip company that spent several years building its own LPU (language processing unit) hardware, said it had raised $350 million in a round led by the investment firm Disruptive, with Nvidia also participating, at a valuation of $3.5 billion — roughly half the $6.9 billion the company was valued at in September 2025.

The round follows Nvidia’s reported $20 billion deal, disclosed in late 2025, under which Nvidia hired Groq founder and chief executive Jonathan Ross along with other senior staff in what was described as a licensing arrangement rather than a conventional acquisition. TechCrunch reported that Groq has since stopped building its own chips and now runs Nvidia GPU systems, repositioning itself as what the industry calls a “neocloud” — an inference-focused cloud provider — rather than a chip designer. The company said it now operates 13 data centres across North America, Europe, the Middle East and Asia-Pacific, serving more than 6 million developers and enterprises, and plans to expand capacity from 54 to over 200 megawatts in 2027.

Groq disputed characterising the new round as a down round, describing the $3.5 billion figure instead as “a new valuation for the post-Nvidia-licensing-deal version of Groq.” Disruptive founder and chief executive Alex Davis, who also serves as Groq’s chairman, framed the pivot as a bet on inference demand rather than chip design: the company was “building Groq into the world’s leading AI inference cloud.” The round illustrates how the Nvidia deal reshaped Groq’s business — from a hardware challenger competing on chip architecture to an operator of Nvidia’s own accelerators — while leaving the company’s headline valuation well below where it stood before Ross’s departure.