AI chip startup Groq has raised $350 million at a $3.5 billion valuation, roughly half the level it commanded less than a year ago, Bloomberg reported.
The funding round, completed on Aug. 17, values Groq nearly 50% below the $6.9 billion valuation it secured in September 2025.
The sharp drop comes after Nvidia struck a deal with Groq in December 2025, paying roughly $20 billion to license the startup’s chip technology and hiring founder and Chief Executive Jonathan Ross along with several key engineers.
The transaction significantly altered Groq’s position in the artificial intelligence chip market.
The startup had emerged as one of the more prominent challengers to Nvidia, pitching its chips as a faster and more cost-efficient option for running, or inferring, AI models.
The latest financing suggests investors are assigning a substantially lower value to the remaining business following the Nvidia agreement and the departure of its founder and key technical personnel.
A funding round completed below a company’s previous valuation, commonly known as a down round, can reflect weaker investor sentiment or changes in a company’s prospects.
In Groq’s case, the lower valuation also follows a fundamental change in the business after Nvidia secured access to its technology and recruited members of its leadership and engineering team.
Groq had previously attracted substantial backing for its international expansion.
In February 2025, the company secured a $1.5 billion commitment from Saudi Arabia to expand AI infrastructure in the kingdom.
The commitment followed Groq’s deployment of what it described as the region’s largest AI inference cluster in December 2024. The company said the cluster was brought online in eight days.
Groq’s technology is focused on AI inference, the process through which trained artificial intelligence models generate responses or predictions.
The market has become increasingly important as technology companies seek to lower the computing costs associated with deploying generative AI applications at scale.
The latest round underscores how dramatically Groq’s position has changed in less than a year.
After raising capital at a $6.9 billion valuation in September 2025 and positioning itself as an alternative to Nvidia in AI inference, the company is now valued at $3.5 billion following a deal that transferred access to its chip technology and some of its most prominent talent to the dominant player in the AI chip market.