AI chipmaker Groq secures $650M raise, redundancies after Nvidia’s $20B non-hire deal

What does an AI company do after one of those no-hire deals, where a competitor pays investors exorbitant fees to “license” IP while poaching its own key talent? For AI chipmaker Groq, the answer seems to be raising more money from investors – said to have benefited after a deal with Nvidia in December – hiring more talent, and pivot.

On Monday, Groq announced a new funding round of $650 million, confirming earlier reports. This promotion comes about six months after Nvidia signed a non-exclusive license agreement for Groq’s technology and hired founder and CEO Jonathan Ross, president Sunny Madra, and other employees. Groq did not disclose its new rating. It was last valued at $6.9 billion following a $750 million round in September.

Ross, from Google, was known in the world of AI chips for helping to 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 called a language processing unit (LPU), which is used for reasoning, and sold it as part of a cloud service or a collection of existing computing hardware.

With Nvidia now owning the IP for LPUs, the GPU giant announced its own hardware suite, the Nvidia Groq 3 LPX inference hardware system, at its GTC event in March.

In response, Groq is focusing on its neocloud business, it said. That business was 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 serves more than five million AI developers, processing billions of tokens each week, the company said.

Groq also hired execs instead. It added Alan Rice as COO, previously at xAI and Meta, after a career in the US 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 company that was acquired by EY in 2024. Malhotra previously spent nearly a decade working on Microsoft’s cloud products.

Whether Groq can succeed after nearly selling itself depends on how competitive its inference cloud can remain, now that key hardware IP is shared with Nvidia. Sure, it has a shot. Inference-related technologies are an area of ​​high demand (and VC investment). But it is also seeing new growth and competition.

However, some seem to survive these types of deals. Scale AI CEO Jason Droege told Forbes that business has rebounded after Meta made $14.3 billion in unearned revenue nearly a year ago, and that the company is on track to make $1 billion in revenue.

In the big money game of AI, anything seems possible.