Groq has raised $350 million in a round led by investment firm Disruptive, with planned participation from Nvidia, valuing the company at $3.5 billion. That valuation is below the $6.9 billion Groq was assigned last September, a few months before Nvidia hired its founder and CEO, Jonathan Ross, and other top talent as part of a licensing deal. A company spokesperson told TechCrunch that Groq does not view this as a down round, but rather as establishing a new valuation for the post-Nvidia-licensing-deal version of Groq.

Groq originally built custom chips called language processing units (LPUs) to compete with Nvidia on inference, the compute needed to run AI workloads in real time. After losing its star team, Groq pivoted from a pure AI chipmaker into a cloud and data center provider that operates Nvidia systems, making the remaining company an Nvidia customer. In June, Groq raised a $650 million round to begin that shift. The company says it intends to scale from 54 megawatts to more than 200 megawatts by 2027, and it currently runs 13 data centers across North America, Europe, the Middle East, and Asia Pacific, serving more than 6 million developers, enterprises, and AI-native companies. The fresh funds are meant to support customers seeking medium- and larger-sized clusters of Nvidia accelerated computing for training and inference.

Alex Davis, Groq‘s chairman and CEO of Disruptive, said in a statement, ‘We are building Groq into the world’s leading AI inference cloud. Inference will without a doubt become the largest and most critical layer of AI infrastructure.’ Even with inference demand high, the story notes an open question: whether neoclouds will be profitable enough over the long term to return on their considerable investment. CoreWeave posted strong second-quarter revenue growth and recent major contracts, including with Meta and Anthropic, but investors remain concerned about high capital expenditures, heavy debt reliance, exposure to rapidly depreciating hardware, and the ability to turn growth into free cash flow. Groq‘s financials are still private, but the pivot places it directly inside Nvidia‘s AI infrastructure ecosystem, alongside CoreWeave, Lambda, and Nebius, which also source GPUs from Nvidia while Nvidia invests billions in some of them.