The shares of Dell Technologies Inc. rose Thursday after Chief Executive Officer Michael Dell said the company was teaming up with Nvidia Corp. is building a “Dell AI factory” for Elon Musk’s startup xAI.
“We’re building a Dell AI factory with Nvidia to power Grok for xAI,” Michael Dell wrote in an X post on Wednesday.
Musk responded to comments on the post, saying that Super Micro Computer Inc. would also provide servers. Super Micro’s X account responded to Musk with a celebratory emoji and a link to his website.
XAI will use Dell’s XE 9680 servers at the factory, a Dell spokesperson said in an email. “Our size, scale and scope of solutions position us well for large-scale projects like this,” the company said in a statement, adding that the size of its so-called graphics processing clusters allows it to train AI models faster.
A Super Micro representative did not immediately respond to requests for comment and additional details.
Both Dell and Super Micro are increasing their server capacity to win more business from companies that build and operate artificial intelligence programs that require more data processing power. Super Micro announced earlier this week that it plans to add three new facilities in Silicon Valley to support AI growth. Dell said last month that revenue from its servers equipped to perform AI tasks more than doubled last quarter from the prior period and that the backlog has grown.
“Dell’s servers are for Elon Musk’s AI startup xAI, and will likely account for half of the server volume, while the rest will be for Super Micro,” said Bloomberg Intelligence analyst Woo Jin Ho. “If the deployment is for Grok 3, which requires 100,000 Nvidia H100 GPUs, the xAI server deal could be worth $3 billion, assuming a price of $1 million per AI server rack.”
Dell shares rose about 1% to $150.63 at 10:56 a.m. in New York trading, after previously gaining as much as 8.3%. Super Micro rose 8.2% to $995.45, after previously rising 10%. Nvidia gained 2.5% to $138.94.
Musk launched xAI, an artificial intelligence startup, in July 2023 in response to OpenAI and its wildly popular chatbot ChatGPT. Musk was instrumental in founding OpenAI, but withdrew his support and warned of the dangers of AI to humanity. The startup launched its ChatGPT competitor Grok last November and raised $6 billion in venture capital funding in May at a pre-money valuation of $18 billion.
First print: June 21, 2024 | 12:50 pm IST