Dell Technologies is reportedly close to finalizing a deal exceeding $5 billion to supply Elon Musk's xAI with AI-optimized servers, Bloomberg News disclosed on Friday. The company's stock surged by 4% following the news, indicating Dell's plan to deliver servers equipped with Nvidia's GB200 semiconductors to xAI this year.
Although specifics are still under negotiation and subject to change, the AI server maker declined to comment, and Musk's representatives have yet to respond to Reuters' request for input.
The demand for AI servers is on the rise among businesses seeking robust hardware for intricate applications, with Musk's enterprises, including Tesla and xAI, emerging as significant clients.
Reportedly, xAI, Musk's venture, intends to accommodate at least one million graphics processing units, marking a substantial extension for the Colossus supercomputer. At present, the supercomputer utilizes 100,000 GPUs to train xAI's chatbot, Grok.
In light of this development, Nvidia, the GPU supplier, along with Dell and Super Micro, responsible for assembling the server racks, will set up operations in Memphis.
In a previous Bloomberg News report, it was revealed that Hewlett Packard Enterprise had also secured a deal to provide servers optimized for AI operations to Musk's social media platform X.