Jonathan Ross, the CEO and founder of Groq, a company that specializes in chips for AI and is a rival of Nvidia Corp. NVDA, is on the brink of doubling his companys valuation to $2.5 billion with a new funding round led by BlackRock Inc.

What Happened: Groq (not to be confused with Elon Musks Grok), which was established in 2016, is set to be valued at $2.5 billion in a new funding round led by BlackRock, reported Business Insider on Wednesday, citing multiple sources. The deal is yet to be finalized, and the terms could still change.

The new funding round could potentially double Groqs previous valuation, which was $300 million in a 2021 round led by Tiger Global Management and D1 Capital Partners, according to Pitchbook data. The company has raised a total of $367 million. Groq has hired Morgan Stanley to assist in raising $300 million in new funding.

Groq, founded by former Google executive Ross, provides chips designed for inference, which processes AI that has already been deployed. The companys chips, known as language processing units, are advertised as over 10 times faster than conventional ones at one-tenth the cost.

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Groq is competing with several hardware inference companies according to the report, including SiMa.ai backed by Point72, Dmatrix backed by Microsoft Corp. MSFT, and Untether.AI backed by Intel Corp. INTC, to challenge Nvidia, which briefly became the most valuable company in the world last week before a significant sell-off.

Groq and BlackRock did not immediately respond to Benzinga's request for comment.

Why It Matters: The AI industry is witnessing rapid developments and significant investments. Recently, Musks xAI raised $6 billion, highlighting the fierce competition in the AI sector. Groqs valuation doubling is a testament to the growing interest and investment in AI hardware.

Chamath Palihapitiya, the billionaire investor and former Facebook executive recently advised developers to use Groq's AI models to enhance their applications and extend their financial runway. This endorsement underscores Groqs potential impact on the AI landscape.

Meanwhile, Nvidia has experienced fluctuations in its market cap, emphasizing the volatile nature of the AI chip market. Despite Nvidias dominance, competitors like Groq are making significant strides.

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This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote

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