Dell Technologies experienced a significant boost in its share price on Friday after reports emerged about a potential $5 billion deal involving artificial intelligence (AI) servers. The agreement is reportedly with xAI, a startup founded by Elon Musk. This startup, which focuses on AI innovations, is said to be investing heavily in infrastructure and technology to support its growing operations.
xAI announced a $6 billion funding round in December to support its ambitious projects. As part of its expansion plans, xAI is collaborating with Nvidia and the social network platform X to establish a data center in Memphis, Tennessee. This facility will be populated with Nvidia's cutting-edge GB200 graphics processing units (GPUs). The strategic move aims to bolster xAI’s capabilities in AI technology.
Dell is expected to supply xAI with servers equipped with Nvidia's GB200 GPUs, contributing to xAI's infrastructure needs. According to Bloomberg, the servers will be delivered within the year, aligning with xAI's timeline for operational readiness. This substantial order forms part of Dell's broader success in the AI server market, with the company reporting $3.6 billion in quarterly demand for AI servers as of November.
In addition to its infrastructure developments, xAI has made its Grok assistant accessible on X, a Musk-owned social network platform. This demonstrates xAI's commitment to integrating AI functionalities into everyday applications, providing users with innovative tools powered by advanced technology.
Dell's financial performance has also been noteworthy. The company's revenue for the quarter ending November 1 reached $24.37 billion, reflecting a 10% increase compared to the previous year. The prospect of a $5 billion deal with xAI is expected to further enhance Dell's position in the competitive AI market.
Despite the excitement surrounding the potential agreement, representatives from both Dell and xAI have not yet responded to requests for comments. However, market analysts anticipate that the collaboration could have significant implications for both companies and the broader AI industry.