Groq has confirmed a $650mn raise to rebuild itself as an AI inference cloud, six months after Nvidia paid out its investors and hired away its founder. The Groq $650M round is a bet that purpose-built chips still beat GPUs.
Groq spent years as one of the loudest challengers to Nvidia. Then, last December, Nvidia all but took it apart.
Now the company has confirmed how it plans to rebuild. Groq raised $650mn in a round led by Disruptive and Infinitum, it said, with existing backers reinvesting alongside them.
The raise was first reported in May. The company has now closed it, and named the team that will spend it.
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In December, Nvidia struck a non-exclusive licensing deal for Groq’s chip technology, in an arrangement reported to be worth around $20bn. It hired away founder and chief executive Jonathan Ross, president Sunny Madra and other engineers.
Nvidia has since folded the technology into its own line-up. At its GTC event in March, it launched the Groq 3 LPX inference system, built on the licensed designs.
That left Groq with its data centres, its software and an awkward question: what is it now?
A pivot to the cloud
The answer is inference, the business of running trained AI models rather than building them. Groq is leaning hard into what it calls its “neocloud” arm.
It now operates 13 data centres across North America, Europe, the Middle East and Asia-Pacific. It says it serves more than five million developers and processes trillions of tokens each week across the sites that run those models.
The new money will fit out that footprint with its latest hardware, including Nvidia’s LPX system. Groq plans to quadruple total capacity to 200 megawatts by the end of 2027.
New names at the top
Adam Winter has taken over as chief executive, with Matt Eng as finance chief and Disruptive founder Alex Davis as chairman.
Alan Rice joins as chief operating officer, after stints on xAI’s Colossus project and at Meta’s data centres, and an earlier career in US Navy submarines.
From July, Sinclair Schuller becomes chief technology officer and Rakesh Malhotra chief product officer. The pair previously built and sold the enterprise software firms Apprenda and Nuvalence. Malhotra spent roughly a decade on Microsoft’s cloud products.
The same investors, again
There is an unusual twist to the round. Many of the backers now writing cheques are the same ones Nvidia cashed out in December.
Disruptive and Infinitum, which both hold board seats, led the deal. Earlier supporters have included Samsung, Cisco and BlackRock.
Groq did not disclose a new valuation. It was last worth $6.9bn, after a $750mn round in September.
A crowded, expensive bet
Groq is wading into a brutal market. Demand for inference is climbing fast, and money is pouring in around it.
AI-infrastructure startup Baseten recently raised $1.5bn at a valuation of up to $13bn. Frontier labs OpenAI and Anthropic keep pushing the cost of compute higher, which only sharpens the appetite for cheaper ways to run their models.
The bottom line
Groq’s pitch is simple. As AI shifts from training models to running them, purpose-built inference chips should beat general-purpose GPUs on speed and cost. Inference, it argues, will eventually need 15 to 20 times more compute than training.
The catch is just as simple. Groq now shares its core chip IP with Nvidia, the very giant it set out to beat. Whether a leaner, re-staffed Groq can still win the inference race is the $650mn question.
