Groq raises $350 million at $3.5 billion valuation, under half of peak

Groq closed a $350 million financing round led by Disruptive, with Nvidia slated to participate, valuing the startup at $3.5 billion. The figure marks a sharp decline from the prior valuation of $6.9 billion in September, though Groq insists the change reflects a re-pricing after its licensing deal with Nvidia rather than a down round.

The story began with an attempt to take on the chip giant directly. Groq built dedicated Language Processing Units (LPU) for real-time inference, but in June of last year Nvidia paid $20 billion in a licensing agreement that included hiring founder and CEO Jonathan Ross and other senior staff. Without the original team, Groq abandoned the independent hardware path and shifted to a cloud-and-data-center provider that runs Nvidia systems, now called “naocloud”.

The new cash adds to $650 million raised in June to fund the pivot. Groq’s stated goal is to raise power capacity from the current 54 megawatts to more than 200 megawatts by 2027. The company now operates 13 data centers across North America, Europe, the Middle East and Asia-Pacific, serving over 6 million developers, organizations and AI-Native companies. The fresh capital will finance medium- and large-scale Nvidia-accelerated compute clusters for training and inference.

“We are building Groq for the world’s leading inference cloud,” said Alex Davis, Groq chairman and Disruptive CEO, adding that inference will undoubtedly become the largest and most critical layer of AI infrastructure. The thesis is clear: as organizations increase production workloads, demand for model execution outpaces demand for training, and Groq aims to become the default address for that demand.

The economic question remains. The naocloud model has yet to demonstrate sustained profitability. CoreWeave posted strong revenue growth and signed contracts with Meta and Anthropic, but investors are wary of massive CapEx, heavy leverage, rapid hardware depreciation, and the ability to turn growth into free cash flow. Groq’s finances stay private, but the pivot places it deep within Nvidia’s ecosystem, similar to CoreWeave, Lambda and Nebius, which also receive GPUs and investment from the manufacturer while competing to build capacity.