Dell’s shares saw a 4% rise on February 14 following reports from Bloomberg that Elon Musk’s artificial intelligence startup, xAI, is preparing to purchase $5 billion worth of servers from Dell. These servers will be equipped with Nvidia’s GB200 graphics processing units (GPUs) and are expected to be delivered later this year.

xAI, Musk’s AI-focused company, recently secured a $6 billion funding round in December, which was partially aimed at acquiring GPUs. This move marks a significant step for Musk’s company, which competes with leading AI firms like OpenAI. xAI has already made its Grok assistant available to users on X, the social media platform also owned by Musk.

Many data center gear manufacturers, including Dell, have seen a surge in demand for AI-related equipment. In November, Dell reported a quarterly order demand for AI servers worth $3.6 billion. The company’s total revenue for the latest quarter reached $24.37 billion, reflecting a 10% year-over-year increase.

While Dell declined to comment on the deal, xAI did not immediately respond to requests for comment. Dell’s involvement in AI server sales is a clear sign of the growing importance of AI infrastructure in the tech industry, with companies like xAI leading the charge.

As Musk continues to develop xAI’s operations, including expanding its facility in Memphis, Tennessee, the deal with Dell could provide the startup with the hardware it needs to scale up its AI capabilities and compete in the growing AI market.

SOURCE: CNBC | PHOTO: AFP

This article was created with AI assistance.