What does an AI company do after one of these no-hire deals, in which a rival pays investors hefty intellectual property “licensing” fees while poaching its core talent? For AI chipmaker Groq, the answer appears to be to raise more money from investors — who reportedly profited handsomely from the Nvidia deal in December — hire more talent and pivot.
Monday, Groq announcement a new funding round of $650 million, confirming previous reports. The round was led by Disruptive, a Dallas-based late-stage investment firm founded by Alex Davis — who is also president of Groq — and Infinitum, a Fort Lauderdale hedge fund.
The raise comes about six months after Nvidia signed a non-exclusive licensing deal for Groq’s technology and hired 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 funding round in September.
Ross, who came from Google, was known in the AI chip world for helping 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 after the Nvidia deal and became CEO.
Groq created a chip called a language processing unit (LPU), used for inference, and sold it as part of a cloud service or on-premises hardware cluster.
While Nvidia now owns the intellectual property for LPUs, the GPU giant has announced its own hardware cluster, the Nvidia Groq 3 LPX hardware inference system, at its GTC event in March.
In response, Groq turned to its neocloud business, he said. This company was led by Madra after Groq acquired its AI data analytics company Definitive Intelligence, in 2024. It now has 13 data centers across North America, Europe, the Middle East and Asia-Pacific and serves more than five million developers and thousands of AI companies, processing billions of tokens every week, according to the company.
Groq also hired replacement executives. 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 later co-founded Nuvalence, a software engineering firm acquired by EY in 2024. Malhotra previously spent about a decade working on Microsoft’s cloud products.
Groq’s success after nearly selling out depends on how competitive its inference cloud is, now that key hardware IP is shared with Nvidia. Of course, he has a chance. Inference-related technology is an area that is seeing huge demand (and Venture Capital Investment). But we are also seeing increasing innovation and competition.
However, others seem to have survived these kinds of agreements. Jason Droege, CEO of Scale AI, said Forbes that business has rebounded after Meta made a $14.3 billion non-hire about a year ago, and the company is on track to generate $1 billion in revenue.
In the expensive game of AI, anything seems possible.
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