Elon Musk’s AI startup xAI has just tapped tech giants Dell Technologies and Nvidia to build an “AI factory” to power large language model Grok, Fortune reports.
Tech leaders team up to aid Musk’s AI ambition
Dell Technologies shares surged on Thursday following CEO Michael Dell’s announcement about the ongoing development of a “Dell AI factory” with the help of Nvidia.
The said AI factory will power xAI’s Grok generative AI chatbot, which is currently available on Elon Musk’s X social media platform.
“We’re building a Dell AI factory with Nvidia to power Grok for xA.”
Michael Dell, Dell Technologies Chairman and CEO
The outspoken American billionaire confirmed Dell’s announcement. He went on to share that Dell will manage the assembly of 50% of the supercomputer racks in xAI’s facility.
Musk also disclosed that Super Micro Computer would also provide servers for the project, apart from Dell’s XE 9680 servers.
Notably, the Greater Memphis Chamber recently verified reports suggesting xAI’s search for a prospective location for its supercomputer in Tennessee.
According to an industry analyst, the xAI server deal might reach a whopping $3 billion.
“Dell’s servers are for Elon Musk’s AI startup xAI, and likely to make up half of server volume, with the rest for Super Micro. If the deployment is for Grok 3, which needs 100,000 Nvidia H100 GPUs, the xAI server deal might be worth $3 billion, assuming a price of $1 million per AI-server rack.”
Bloomberg Intelligence analyst Woo Jin Ho
Dell, Nvidia stocks jump on Elon Musk’s AI project
According to the report, Dell shares rose approximately 1% to $150.63 at 10:56 a.m. in New York trading following the AI factory deal announcement after previously jumping as much as 8.3%.
Super Micro shares surged 8.2% to $995.45 after previously surging 10%, while Nvidia shares gained 2.5% to $138.94.
AI race heats up as Musk taps tech giants
In July 2023, Elon Musk formally launched xAI as it seeks to challenge OpenAI (which he helped establish) and its popular ChatGPT chatbot.
The American business tycoon withdrew his support to OpenAI and even warned the world about the potential risks of Artificial Intelligence to humanity.
Musk’s previous remarks did not stop him from launching his own language model under xAI in November 2023.
Details remain scarce on the scale and specifications of the AI Factory. However, Elon Musk’s insatiable GPU appetite and the sheer computational requirements necessary to take on AI giants like OpenAI hint that the project would likely be one of the most potent supercomputers ever developed.
In hindsight, xAI successfully raised $6 billion in a Series B funding round in May 2024. It aims to utilize the funds to develop new products and deliver them to the market. It also plans to rev up infrastructure development and boost research initiatives.
