Groq, the Nvidia Challenger, Could Secure $2.5 Billion in New Funding Round

Groq is a challenger to Nvidia in the development of chips for artificial intelligence. Sources report that the company is set to be valued at $2.5 billion in a new funding round led by Blackrock. Groq and Blackrock have not commented on this development. It was previously rumored that Groq was looking to raise $300 million in new funding, for which they hired Morgan Stanley. The specific valuation and lead investor had not been reported before.

While the new financing is still pending and terms could change, it is expected that the deal will more than double Groq’s previous valuation when it raised $300 million in a round led by Tiger Global Management and D1 Capital Partners in 2021. The company has raised a total of $367 million since its founding in 2016 by former Google executive Jonathan Ross. Groq specializes in chips designed for inference, aimed at processing AI that is already deployed. Its chips, known as “language processing units,” are said to be over ten times faster than traditional chips and one-tenth the cost.

Groq faces competition from companies such as SiMa.ai, Dmatrix, and Untether.AI in the hardware inference sector, as they aim to challenge Nvidia’s dominance. Another Nvidia rival, Cerebras, has reportedly filed for an IPO confidentially. Notably, Groq was at the center of a dispute at Social Capital, a venture firm founded by Chamath Palihapitiya. Two partners were fired in March after being accused of soliciting outside investment for Groq, a company that had been backed by Social Capital eight years ago.