What does an AI company do after one of those rent-to-own deals where a rival pays investors a hefty IP “license” fee while chasing its critical talent? For artificial intelligence chipmaker Groq, the answer appears to be to raise more money from investors — who are said to have benefited greatly after a deal with Nvidia in December — to hire more talent and pivot.
On Monday Grok was announced a new round of funding of $650 million, confirming earlier reports. The round was led by Disruptive, a Dallas-based late-stage investment firm founded by Alex Davis — who is also president of Groq — and Infinitum, a Fort Lauderdale hedge fund.
The increase comes about six months after Nvidia signed a non-exclusive licensing deal for Groq’s technology and hired founder and CEO Jonathan Ross, president Sunny Madra and other employees. Groq did not disclose its new valuation. Its latest valuation was $6.9 billion after a $750 million round in September.
Ross, who came from Google, was known in the AI chip world for helping to create Google’s AI chip, the Tensor Processing Unit. He teamed up with another Google engineer, Doug Wightman, to launch Groq a decade ago. Wightman stayed on after the Nvidia deal and became CEO.
Groq created a chip it called a language processing unit (LPU) used for inference and sold it as part of a cloud service or an on-premises hardware cluster.
With Nvidia now owning the IP for LPUs, the GPU giant has announced its own hardware cluster, the Nvidia Groq 3 LPX hardware conclusion system, at the GTC event in March.
In response, Groq has focused on its neocloud business, he said. That business was run by Madra after Groq acquired AI data analytics company Definitive Intelligence, in 2024. It has grown to 13 data centers in North America, Europe, the Middle East and APAC and serves over five million developers and thousands of AI companies, processing trillions of chips every week, the company says.
Groq has also hired replacements. Added Alan Rice as COO, previously at xAI and Meta, after a career in the US Navy.
It also added an entrepreneurial duo, Sinclair Schuller, who joins as CTO, and Rakesh Malhotra as CPO. They previously worked together at Apprenda, a cloud software business founded by Schuller. They then co-founded Nuvalence, a software engineering firm that was acquired by EY in 2024. Malhotra previously spent about a decade working on Microsoft’s cloud products.
Whether Groq can succeed after nearly selling itself depends on how competitive its inference cloud can remain, now that its core hardware IP is shared with Nvidia. Sure, he has a plan. Inference-related technology is an area facing huge demand (and VC investment). But he also sees increasing innovation and competition.
However, others seem to have survived these kinds of deals. said Scale AI CEO Jason Droege Forbes that the business has rebounded since Meta took a $14.3 billion non-acquisition about a year ago, and that the company is on track for $1 billion in revenue.
In the AI big money game, anything seems possible.
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