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What does an AI company do after one of those not-acqui-hire deals, where a rival pays investors a hefty IP \u201clicensing\u201d fee while poaching its critical talent? For AI chipmaker Groq, the answer appears to be raise more money from investors \u2014 who were said to have profited handsomely after a deal with Nvidia in December \u2014 hire more talent, and pivot.<\/p>\n
On Monday, Groq announced<\/a> a new $650 million funding round, confirming earlier reports<\/a>. The round was led by Disruptive, a Dallas-based late-stage investment firm founded by Alex Davis \u2014 who also serves as Groq\u2019s chairman \u2014 and Infinitum, a Fort Lauderdale hedge fund.<\/p>\n The raise comes roughly six months after Nvidia signed a non-exclusive licensing agreement for Groq\u2019s 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<\/a> in September.<\/p>\n Ross, who came from Google, was known in the AI chip world for helping create Google\u2019s AI chip, the Tensor Processing Unit<\/a>. 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. <\/p>\n Groq created a chip it called a language processing unit (LPU), used for inference, and sold it\u00a0as part of a cloud service or an on-premises hardware cluster.<\/p>\n With Nvidia now owning the IP for LPUs, the GPU giant announced its own hardware cluster, the Nvidia Groq 3 LPX <\/a>inference hardware system, at its GTC event in March.<\/p>\n 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.<\/p>\n 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.<\/p>\n 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\u2019s cloud products.<\/p>\n 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<\/a>). But it\u2019s also seeing increasing innovation and competition.<\/p>\n Still, others seem to have survived these sorts of deals. Scale AI\u2019s CEO Jason Droege told Forbes<\/a> that business has rebounded after Meta did a $14.3 billion not-acqui-hire<\/a> about a year ago, and that the company is on track to do $1 billion in revenue.<\/p>\n In the big-money game of AI, anything seems possible.<\/p>\n<\/div>\n When you purchase through links in our articles, we may earn a small commission<\/a>. This doesn\u2019t affect our editorial independence.<\/em><\/p>\n