Nvidia AI chip challenger Groq raises even more than expected, hits $6.9B valuation

AI chip startup Groq confirmed Wednesday that it raised a fresh $750 million in funding at a post-money valuation of $6.9 billion.  

This topped the rumored numbers when word leaked in July that Groq was raising. At that time, reports suggested that the raise would be about $600 million, at near a $6 billion valuation. 

Groq, which also sells data center computing power, previously raised $640 million at a $2.8 billion valuation in August 2024, making this more than double the valuation in about a year. Groq has now raised over $3 billion to date, PitchBook estimates.

Groq has been a hot commodity because it is working on breaking the chokehold that AI chip maker Nvidia has over the tech industry. Groq’s chips are not GPUs, the graphics processing units that typically power AI systems. Instead, Groq calls them LPUs, (language processing units) and calls its hardware an inference engine — specialized computers optimized for running AI models quickly and efficiently.  

Its products are geared toward developers and enterprises, available as either a cloud service or an on-premises hardware cluster. The on-prem hardware is a server rack outfitted with a stack of its integrated hardware/software nodes. Both the cloud and on-prem hardware run open versions of popular models, like those from Meta, DeepSeek, Qwen, Mistral, Google and OpenAI. Groq says its offerings maintain, or in some cases improve, AI performance at significantly less cost than alternatives.

Groq’s founder, Jonathan Ross, has a particularly relevant pedigree for this work. Ross previously worked at Google developing its Tensor Processing Unit chip, which are specialized processors designed for machine learning tasks. The TPU was announced in 2016, the same year Groq emerged from stealth. TPUs still power Google Cloud’s AI services.

Groq says it now powers the AI apps of more than 2 million developers, up from 356,000 developers when the company talked to TechCrunch a year ago.

The new round was led by investment firm Disruptive, with additional funding from BlackRock, Neuberger Berman, Deutsche Telekom Capital Partners, and others. Existing investors, including Samsung, Cisco, D1, and Altimeter, also joined the round.