Investing.com -- Groq, a San Jose-based startup aiming to take on Nvidia (NASDAQ: NVDA ) in the booming AI chip market, is in talks to raise between $300 million and $500 million at a $6 billion post-investment valuation, The Information reported on Wednesday, citing sources familiar with the matter.

The potential deal would double Groq’s valuation from its last funding round a year ago, amid a sharp rise in demand for AI infrastructure, the report stated.

Groq expects its revenue to jump from $90 million last year to around $500 million in 2025, boosted by a $1.5 billion chip agreement with Saudi Arabia and expanding interest in non-Nvidia alternatives.

While Nvidia reached a $4 trillion market cap this week and dominates chips for both training and inference in AI, Groq is targeting the inference market with a faster, energy-efficient alternative, the report noted.

The company says its chips are used to run open-source models like Meta’s (NASDAQ: META ) Llama 4 and Google’s (NASDAQ: GOOGL ) Gemma.

Groq, which recently announced plans for a data center in Finland, generates most of its revenue from cloud services, and has raised over $1 billion from backers including BlackRock Inc (NYSE: BLK ), Samsung Ventures, and Tiger Global, the report added.