AI infrastructure company Groq has raised $350 million in a Series A funding round led by Disruptive, while Nvidia plans to participate in the round. The deal raised Groq’s valuation to $3.5 billion, with the company set to use the funds to expand its global infrastructure and cloud services aimed at AI applications.
The new valuation comes after a period that saw a significant change in the company’s business model. Groq was valued at approximately $6.9 billion in September 2025, nearly double its current valuation. However, a company spokesperson rejected describing the round as a down round, explaining that the $3.5 billion figure reflects a new valuation for the company following its licensing agreement with Nvidia.
From Developing Chips to Operating Cloud Infrastructure
Groq originally worked on developing its own chips called language processing units, or LPUs, with the aim of competing with Nvidia in AI inference. But the move of its founder and CEO, Jonathan Ross, and several of its prominent employees to Nvidia, as part of a $20 billion licensing agreement reached in December, prompted the company to reshape its business.
Groq is now focused on operating Nvidia-based systems and providing cloud services and data centers for customers, rather than developing its own hardware as a chip company. This model places it among neocloud companies that provide access to large clusters of graphics processing units and the infrastructure needed to train and run AI models.
Groq raised $650 million in June to accelerate this transition, bringing its total funding over the past two months to $1 billion.
Expanding Capacity to Serve Intelligent Models
Groq currently operates 13 data centers in North America, Europe, the Middle East, and Asia-Pacific, providing services to more than 6 million developers, enterprise customers, and AI-focused companies. According to the source, the new round will support customers that need medium-sized and large computing clusters based on Nvidia accelerators to train and run AI models.
The company’s data centers currently have a capacity of 54 megawatts, while it aims to exceed 200 megawatts by 2027. Alex Davis, chairman of Groq’s board and CEO of Disruptive, said the goal is to turn Groq into one of the leading cloud services specializing in AI inference.
What Does This Mean for the Neocloud Market?
Groq’s transformation places the company directly within Nvidia’s AI infrastructure ecosystem, which also supports neocloud companies such as CoreWeave, Lambda, and Nebius, while investing in some of these companies. This connection gives Groq access to the hardware ecosystem required for expansion, but at the same time highlights the sector’s financial challenges: data centers require high capital expenditures, companies may need to borrow, and equipment faces the risk of rapidly losing its value. As a result, the ability of neocloud companies to achieve sustainable profits remains in question despite growing demand for inference services.