Groq raised $350 million at a $3.5 billion valuation as the former AI chipmaker pivots to a neocloud business operating Nvidia-powered data centers.

The Series A round was led by investment firm Disruptive, with planned participation from Nvidia. The valuation marks a significant drop from the $6.9 billion Groq commanded in September 2024.

Groq originally built custom Language Processing Units (LPUs) to compete with Nvidia on AI inference workloads. That strategy shifted after Nvidia hired founder Jonathan Ross and other key talent in December 2024 as part of a $20 billion licensing deal.

The company now operates 13 data centers across North America, Europe, the Middle East, and Asia Pacific. Groq serves more than 6 million developers and enterprises seeking GPU clusters for AI training and inference.

Scaling data center footprint

Groq plans to expand from 54 megawatts to more than 200 megawatts in 2027. The company raised $650 million in June to fund the initial pivot from chipmaker to cloud provider.

A company spokesperson said the lower valuation doesn't constitute a down round. Instead, it reflects a new baseline for the "post-Nvidia-licensing-deal version of Groq."

"We are building Groq into the world's leading AI inference cloud," said Alex Davis, Groq's chairman and CEO of Disruptive, in a statement.

The fresh capital will support customers seeking medium and large Nvidia accelerated computing clusters. Groq competes with established cloud providers like CoreWeave and Together AI in the AI infrastructure space.

Groq's pivot reflects broader market dynamics where specialized AI chip startups face mounting competition from Nvidia's dominant position. The company's shift to cloud services allows it to monetize AI demand without the capital-intensive chip development process.