AI Chip Startup Groq Secures $750M in Funding, Doubling Valuation to $6.9B, Challenges Nvidia’s Dominance
Silicon Valley-based AI chip startup Groq announces a significant fundraising milestone of $750 million, bringing its valuation to an impressive $6.9 billion. This figure surpasses earlier speculations in July that suggested the company was aiming for around $600 million at a near-$6 billion valuation.
Originally valued at $2.8 billion after a 2024 funding round, this latest investment more than doubles Groq’s worth within a year. To date, the firm has raised over $3 billion, according to PitchBook estimates.
Groq distinguishes itself in the tech industry by challenging AI chip market leader Nvidia through its innovative Language Processing Units (LPUs), rather than Graphics Processing Units (GPUs) typically employed for AI systems. The company markets its hardware as an inference engine – specialized computers optimized for swift and efficient running of AI models.
Groq caters to both developers and enterprises, offering their technology either as a cloud service or an on-premises hardware cluster. The on-prem hardware consists of a server rack equipped with integrated hardware/software nodes that run open versions of popular AI models from companies such as Meta, DeepSeek, Qwen, Mistral, Google, and OpenAI. According to Groq, their solutions maintain or enhance AI performance at substantially lower costs compared to alternatives.
Jonathan Ross, founder of Groq, boasts a highly relevant background for this venture. Prior to founding the company, he worked at Google where he contributed to the development of Tensor Processing Unit (TPU) chips – specialized processors designed for machine learning tasks. TPUs currently power Google Cloud’s AI services, providing a valuable connection between Groq and its predecessor.
Groq now powers the AI applications of over 2 million developers, marking an increase from the 356,000 reported in their conversation with TechCrunch last year.
The funding round was spearheaded by investment firm Disruptive, with additional contributions from BlackRock, Neuberger Berman, Deutsche Telekom Capital Partners, and others. Existing investors including Samsung, Cisco, D1, and Altimeter also participated in the round.
