AI chipmaker Groq confirms $650M raise, re-staffs after Nvidia’s $20B not-acqui-hire deal
What does an AI company do after one of those not-acqui-hire deals? Groq raised money, is leaning into its neocloud business, and is hiring new execs.
What does an AI company do after one of those not-acqui-hire deals, where a rival pays investors a hefty IP “licensing” fee while poaching its critical talent? For AI chipmaker Groq, the answer appears to be raise more money from investors — who were said to have profited handsomely after a deal with Nvidia in December — hire more talent, and pivot.
On Monday, Groq announced a new $650 million funding round, confirming earlier reports . The raise comes roughly six months after Nvidia signed a non-exclusive licensing agreement for Groq’s technology and hired away founder and CEO Jonathan Ross, president Sunny Madra, and other employees. Groq did not disclose its new valuation. It was last valued at $6.9 billion following a $750 million round in September.
Ross, who came from Google, was known in the AI chip world for helping 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 announced its own hardware cluster, the Nvidia Groq 3 LPX inference hardware system, at its GTC event in March.
In response, Groq has pivoted to its neocloud business, it said. That business had been run by Madra after Groq acquired his AI data analytics company Definitive Intelligence, in 2024. It has grown to 13 data centers across North America, Europe, the Middle East, and APAC and is serving over five million developers and thousands of AI companies, processing trillions of tokens each week, the company says.
Groq has also been hiring replacement execs. It added Alan Rice as COO, previously at xAI and Meta, after a career in the U.S. Navy. It also added an entrepreneurial duo, Sinclair Schuller, who joins as CTO, and Rakesh Malhotra as CPO. They previously worked together at Apprenda, an enterprise cloud software company founded by Schuller; they then co-founded Nuvalence, a software-engineering firm acquired by EY in 2024. Malhotra previously spent about a decade working on Microsoft’s cloud products.
Whether Groq can succeed after almost selling itself depends on how competitive its inference cloud can remain, now that the key hardware IP is shared with Nvidia. Certainly, it has a shot. Inference-related tech is an area experiencing tremendous demand (and VC investment ). But it’s also seeing increasing innovation and competition.
Still, others seem to have survived these sorts of deals. Scale AI’s CEO Jason Droege told Forbes that business has rebounded after Meta did a $14.3 billion not-acqui-hire about a year ago, and that the company is on track to do $1 billion in revenue.
In the big-money game of AI, anything seems possible.
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Key takeaways
- Groq demonstrates resilience by raising $650 million after losing executives to Nvidia.
- Groq's new business strategy focusing on neocloud may inspire Brazilian startups to diversify their offerings.
- Competition with Nvidia will require Groq to continuously innovate in AI inference solutions.
Editorial analysis
The recent $650 million funding round by Groq, following the departure of key executives to Nvidia, highlights the resilience and adaptability of technology companies in the AI sector. For Brazil, where the startup and technological innovation ecosystem is expanding, this move can serve as an example of how companies can rebound after significant challenges. Groq's focus on its new neocloud business line demonstrates that diversification and continuous innovation are essential for survival in a competitive market.
Moreover, Groq is repositioning itself in a landscape where Nvidia, with its market strength and resources, becomes an even more formidable competitor. Groq's success in maintaining its relevance will depend on its ability to offer competitive solutions in AI inference, especially considering that Nvidia now holds the intellectual property for LPUs. For Brazil, where AI solution development is on the rise, this situation may inspire local startups to seek strategic partnerships and develop proprietary technologies to avoid excessive dependencies on large players.
Finally, the hiring of new executives with experience in leading tech companies like Meta and Microsoft suggests that Groq is preparing for robust growth and fierce competition. Brazil, with its potential for tech talent, can benefit from observing how Groq implements its growth and adaptation strategy, potentially inspiring local initiatives to strengthen their teams and innovations. What follows for Groq will be a test of its innovation and resilience capabilities in a rapidly evolving market.
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