Groq's Valuation Cut in Half as it Shifts Focus to Data Centers

Groq, a startup founded in 2016 to build chips and challenge Nvidia's dominance, has seen its valuation cut in half since September. The company raised $350 million on Monday with a new round valuing it at $3.5 billion.

The drop is attributed to Nvidia signing a licensing agreement with Groq last year, bringing founder Jonathan Ross and key staff members onboard without acquiring the business outright. This unusual hiring practice has been used by other tech giants like Meta Platforms and Google to tap into AI talent without full acquisition.

Groq has shifted its focus from building chips to running data centers that provide computing power for AI software, a role called inference. The company aims to increase its total data-center capacity beyond 200 megawatts by next year, with some of the latest funding going towards this goal.