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AI chip startup Groq targets $6 billion valuation in new funding round amid Saudi deal

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U.S.-based semiconductor startup Groq is in talks with investors to raise between $300 million and $500 million, aiming for a post-investment valuation of $6 billion, according to a report by The Information on Wednesday citing sources familiar with the matter.

The funding is intended to support Groq’s recently announced agreement with Saudi Arabia, which includes a $1.5 billion commitment secured in February to expand the delivery of Groq’s advanced AI chips to the kingdom.

Groq has indicated to investors that these contracts with Saudi Arabia could generate approximately $500 million in revenue in 2025, underscoring the significance of the deal in its growth trajectory.

The Silicon Valley-based company, known for manufacturing AI inference chips designed to optimize speed and efficiently execute commands from pre-trained models, has not yet responded to requests for comment.

In its previous financing round last August, Groq raised $640 million in a Series D round led by Cisco Investments, Samsung Catalyst Fund, and BlackRock Private Equity Partners, which valued the company at $2.8 billion.

Musk’s xAI Acquires X, Valuing Social Media Platform at $33 Billion

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Elon Musk’s artificial intelligence company, xAI, has acquired X (formerly Twitter) in a deal that values the social media platform at $33 billion. This acquisition also boosts the valuation of xAI to $80 billion, with plans to leverage the combined assets, including data, models, and computing resources, to enhance xAI’s chatbot, Grok.

Musk, who also leads Tesla and SpaceX, emphasized the synergy between xAI and X, stating that the futures of both companies are now intertwined. While the specifics of the deal, including leadership integration and potential regulatory scrutiny, remain unclear, it marks a significant consolidation of Musk’s companies under his leadership.

Saudi Arabian investor Prince Alwaleed bin Talal, a major stakeholder in both X and xAI, welcomed the deal, estimating that the value of his investments would reach between $4 billion and $5 billion. Despite Musk not seeking investor approval beforehand, sources indicate that the deal is viewed as part of Musk’s strategy to consolidate his influence and management at his companies.

xAI, which competes with major players like OpenAI and China’s DeepSeek, has been expanding rapidly, especially in AI infrastructure, with its supercomputer “Colossus” in Memphis touted as the largest in the world. The merger with X could provide xAI with more avenues for distributing its AI products, tapping into a real-time feed of user-generated data.

Niantic Sells Game Division to Saudi-Owned Scopely for $3.5 Billion Amid Shift to Geospatial Tech

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Niantic Labs, the maker of the highly successful “Pokémon Go”, announced on Wednesday that it would sell its video game division to Saudi Arabia-owned Scopely for $3.5 billion. This move marks a significant shift for Niantic, which will now focus on geospatial technology after failing to replicate the overwhelming success of its 2016 mobile game hit.

The sale is part of a broader strategy by Saudi Arabia to bolster its gaming sector. The kingdom’s sovereign wealth fund, through Savvy Games, had already acquired Scopely for $4.9 billion in 2023, as part of its effort to diversify its economy away from fossil fuels. The transaction will advance Saudi Arabia’s ambitions of becoming the “ultimate global hub” for the gaming industry.

In addition to the sale, Niantic will distribute an extra $350 million to its equity holders. Furthermore, the company will spin off its geospatial AI business into a new entity, Niantic Spatial, led by Niantic founder and CEO John Hanke. Niantic Spatial will be funded with $250 million, of which $200 million will come from Niantic’s balance sheet and $50 million from Scopely. Niantic’s original investors will continue to hold shares in Niantic Spatial.

This strategic shift follows several challenging years for Niantic. After the phenomenal success of “Pokémon Go”, the company struggled to replicate that magic with other titles, including the “Harry Potter: Wizards Unite” game, which was shut down in 2022. Niantic also had to make layoffs in 2022 and 2023, further signaling the company’s struggles.

For Saudi Arabia, the deal aligns with its plan to invest nearly $38 billion in the global gaming industry through Savvy Games Group, which is already a significant investor in major video game companies, including a 7.54% stake in Nintendo.