On Wednesday, Nvidia Corporation NVDA briefly hit $4 trillion market cap. Meanwhile, its rival Silicon Valley startup Groq is reportedly aiming to raise fresh capital at a $6 billion valuation to fulfill a major Saudi contract.
What Happened: Groq has spoken to investors about raising between $300 million and $500 million to support its expansion efforts, particularly tied to a $1.5 billion agreement with Saudi Arabia to deliver advanced AI inference chips, reported Reuters (via The Information).
The startup told potential investors it expects to generate around $500 million in revenue this year from its contracts in the Gulf nation.
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Groq's chips are designed to process and execute commands of pre-trained AI models with high speed and efficiency — a direct challenge to Nvidia.
Why It's Important: In May, it was reported that Saudi Arabia's sovereign wealth fund-backed AI firm, HUMAIN, has chosen Groq to handle its inference operations.
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HUMAIN, backed by Saudi Arabia's Public Investment Fund and chaired by Crown Prince Mohammed bin Salman, was created to unify the nation's AI investments into one company offering AI services, data centers, cloud solutions and an Arabic large language model.
In its last funding round in August 2023, Groq raised $640 million at a $2.8 billion valuation from investors including Cisco Investments, Samsung Catalyst Fund and BlackRock Private Equity Partners.
Earlier this month, Groq opened its first European data center in Helsinki, Finland, to support its global expansion and meet growing AI demand in Europe.
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