Groq Developer and App Milestones

By Patrick Moorhead - April 11, 2024

The Six Five team discusses Groq Developer and App Milestones

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Transcript:

Daniel Newman: You and I both, I think we’re both investors in Groq. Let’s put that up front on this, but the company has come out of its shell and it’s had just some really explosive moments over the last couple quarters. Got a really nice readout on the all-in, made some big acquisitions, but also Pat we’re seeing some big milestones.

Patrick Moorhead: So Chamath Palihapitiya is an investor. He rarely talks about his investments, but he’s super excited about this one and I think it’s for good reason. And that is the LPU, which is essentially the chip that Groq has is very performant versus NVIDIA GPUs and Dan, we have debated ASICs and their pluses and their minuses. And the trick with an ASIC-based accelerator is if you can put a software layer, I call it the magic API, so you can get two to three generations out of your chip, NVIDIA’s got a really good TCO equation because everybody knows that you’ll get, again, two or three generations of something out of the chip today and in the future. A perfect example is that GPT was trained on the predecessor to the A100, not the H100 or even the A100. So with that said, big news, they have 70,000 developers and 19,000 applications on their cloud, and their cloud is basically… This was an acquisition of Definitive IO, CEO Sunny Madra was out there, very quick acquisition here.

But what this acquisition did, it enables, it lights up the capability for developers to go in and not just test workloads, but use them to train and infer workloads. Now long term, you want to stand this up on an on-prem cloud or something, let’s say in a Colo at Equinix. But Dan and I, you and I are always looking for the… We know AMD with its GPU is competitive. Intel in 2025 with Falcon Shores, with a little bit of ASIC juice involved is a next player, but which ASIC is going to make things happen, right? Intel Gaudi, LPU. So exciting stuff and exciting progress by the company.

Daniel Newman: Yeah, I think I saw Jonathan Ross share something, I don’t know if it was on on LinkedIn or Twitter, I’ll have to find the link to it, but where he basically said “We’re not selling chips any more except specifically to some government defense requirements.” And he’s going to focus 100% on this cloud capability with that acquisition, the company is really starting to stand up and make this extraordinarily accessible to developers. And you saw the numbers from Sonny Madra, 70,000 developers now are developing 19,000 apps the Groq cloud. Pat, I mean, it’s an incredible bit of progress and the need for alternatives, I understand that NVIDIA is an incredibly powerful company that builds great stuff. I think we can all agree on that. I just think the idea that it’s zero sum. We’ve got this weird world where everybody thinks everything’s zero sum now. It’s going to be all one or nobody. Look, AMD is going to take a part of the market with their GPUs.

The cloud providers are going to build homegrown silicon that are going to be powerful and usable for certain workloads. We’re going to see CPUs on Xeon. Pat, I shared something yesterday about a company that’s with AMX and Xeon you can do a whole lot of inference on A CPU and we will see a lot of inference being done on a CPU. Pat and Groq has built something that’s very specialized. Now the company continues to talk about it can do more than language, but what they’re doing is they’re basically making it extensible. They’re making it available, and they’ve shown that they can make it extremely performant. And so we knew that from the beginning, Pat, there was a reason that both of us felt this was investible when we got involved in it and we continue to cheer for it. But also I think the market needs to pay attention.

There was a time, I think both of us were concerned that Groq’s future was going to be challenged, but in the last few months they’ve come out swinging with innovation. They seem to be refocused, repurposed, and the market is finding and identifying their technology and we’re hearing a lot more about it. And that kind of buzz is good. And by the way, frothy, frothy valuations in AI right now. I mean, look, I shared something the other day. I think one company in eight weeks went from a $300 million round to a $2 billion valuation on the same company without creating any additional revenue. VCs are back, the froth is back. I know we had a little bit of a sell off this week. Crypto bros are back. The money is flowing in, the AI exuberance is here. But the nice thing about Groq, Pat, is this isn’t exuberance, it’s a real company, real technology. It’s foundational and it’s in a space that needs more competitors, chip makers.

Patrick Moorhead

Patrick founded the firm based on his real-world world technology experiences with the understanding of what he wasn’t getting from analysts and consultants. Ten years later, Patrick is ranked #1 among technology industry analysts in terms of “power” (ARInsights)  in “press citations” (Apollo Research). Moorhead is a contributor at Forbes and frequently appears on CNBC. He is a broad-based analyst covering a wide variety of topics including the cloud, enterprise SaaS, collaboration, client computing, and semiconductors. He has 30 years of experience including 15 years of executive experience at high tech companies (NCR, AT&T, Compaq, now HP, and AMD) leading strategy, product management, product marketing, and corporate marketing, including three industry board appointments.