Groq just closed a $350 million round led by Disruptive, with Nvidia also planning to participate. The valuation sits at $3.5 billion — nearly half the $6.9 billion the company commanded last September. That collapse makes sense when you consider what happened in between: Nvidia hired Groq’s founder and CEO Jonathan Ross along with other top talent as part of a licensing deal, gutting the startup’s chip ambitions and forcing a complete rethink.
The company now describes itself as a neocloud, operating Nvidia-powered data centers rather than building its own LPUs. A spokesperson told TechCrunch the company doesn’t view this as a down round, calling it instead a fresh valuation for the ‘post-Nvidia-licensing-deal version of Groq.’ That framing is doing a lot of work, but the math is the math. Groq went from competing with Nvidia on inference chips to renting Nvidia’s hardware — a strategic reversal that turned a rival into a customer.
Groq currently runs 13 data centers across North America, Europe, the Middle East, and Asia Pacific, serving more than 6 million developers and enterprises. The company raised $650 million in June to kick off the pivot and plans to scale from 54 megawatts to over 200 megawatts by 2027. Chairman and Disruptive CEO Alex Davis made the ambition plain: ‘We are building Groq into the world’s leading AI inference cloud. Inference will without a doubt become the largest and most critical layer of AI infrastructure.’
The broader question hanging over this round is whether any neocloud can generate real returns. CoreWeave posted strong Q2 revenue and landed contracts with Meta and Anthropic, yet investors still fret over its capital expenditures, debt load, and depreciating hardware. Groq’s financials remain private, but its position inside Nvidia’s ecosystem is hardly unique — Nvidia supplies GPUs to CoreWeave, Lambda, and Nebius while investing billions into several of them. The irony is hard to miss: Groq spent years trying to beat Nvidia and ended up as one more company racing to buy its chips. Whether that’s a viable endgame, or just a slower way to lose, is the bet Davis is asking investors to make.
