AI chipmaker Groq has confirmed a $650 million funding round, roughly six months after Nvidia signed a non-exclusive licensing agreement for its chip technology and hired away founder and CEO Jonathan Ross, president Sunny Madra, and other key employees. The deal, which sources have described as a “not-acqui-hire” worth approximately $20 billion in licensing fees, left the startup without its core chip IP and much of its leadership.
Groq did not disclose its valuation in this round. It was last valued at $6.9 billion following a $750 million round in September 2024. The new funding, first reported by TechCrunch, signals investor confidence in the company’s ability to reinvent itself after effectively selling its core technology to the dominant player in AI chips.
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The Nvidia deal and Groq’s pivot
Groq had created a chip called a language processing unit (LPU), designed specifically for AI inference — the process of running trained models to generate answers. The company sold access to the LPU through a cloud service and on-premises hardware clusters. In December 2024, Nvidia signed a non-exclusive licensing agreement for the LPU technology and hired Ross, Madra, and other employees. At Nvidia’s GTC event in March 2025, the GPU giant announced its own hardware cluster, the Nvidia Groq 3 LPX inference system.
In response, Groq has pivoted to its neocloud business, which had been run by Madra after Groq acquired his AI data analytics company Definitive Intelligence in 2024. The company says it now operates 13 data centers across North America, Europe, the Middle East, and Asia-Pacific, serving over five million developers and thousands of AI companies. Groq claims to process trillions of tokens each week through its cloud platform.
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New leadership team
Groq has been rebuilding its executive ranks. It added Alan Rice as COO, who previously held roles at xAI and Meta after a career in the U.S. Navy. The company also added an entrepreneurial duo: Sinclair Schuller as CTO and Rakesh Malhotra as CPO. They previously worked together at Apprenda, an enterprise cloud software company founded by Schuller, and later co-founded Nuvalence, a software engineering firm acquired by EY in 2024. Malhotra spent about a decade working on Microsoft’s cloud products.
Doug Wightman, a former Google engineer who co-founded Groq with Ross a decade ago, stayed on after the Nvidia deal and became CEO.
Can Groq compete without its chip IP?
The question facing Groq is whether it can succeed in the inference cloud market now that its key hardware IP is shared with Nvidia. Inference-related technology is experiencing tremendous demand and attracting significant venture capital investment, but it is also seeing increasing innovation and competition from companies including Cerebras, SambaNova, and d-Matrix.
Other companies have survived similar “not-acqui-hire” deals. Scale AI’s CEO Jason Droege told Forbes that business 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.
Groq’s neocloud business now serves as its primary offering. The company’s ability to maintain competitive pricing and performance without exclusive control over its chip design will determine whether it can carve out a sustainable position in the rapidly evolving AI infrastructure market.
Frequently Asked Questions
Why did Groq raise money after Nvidia’s deal?
Groq raised $650 million to fund its pivot to a neocloud business after Nvidia licensed its LPU chip technology and hired away its founder and president. The company is now focused on building a cloud service for AI inference.
What is Groq’s new strategy after losing its chip IP?
Groq is pivoting to its neocloud business, which runs AI inference workloads across 13 data centers globally. It has also hired new executives, including a COO from xAI and Meta, and a CTO and CPO from enterprise cloud software.
How does Groq compete with Nvidia now?
Groq competes by offering inference-as-a-service through its cloud platform, serving over five million developers. While Nvidia now owns the LPU IP and has launched its own hardware system, Groq is betting on its cloud infrastructure and growing developer ecosystem.
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