Recently, we reported that HPE beat Supermicro and Dell Technologies in a $1 billion deal to supply servers optimized to AI work to Elon Musk’s X. These servers may power Grok, X’s AI chatbot.
X announced that it would be releasing Grok-2 for all users free of charge at the end 2024. Losing out to HPE, which along with Supermicro bid to supply equipment, was a blow to Dell.
If a new report by If Bloomberg is accurate, the iconic manufacturer could be on its way to winning an even larger contract from one Musk’s other ventures xAI.
Memphis bound?
According to the report, Dell is nearing a finalization of a deal valued at over $5 billion for AI-focused servers with Nvidia’s GB200 chips. Sources familiar with the talks told the news site that some aspects were still being worked out. If all goes well – which it will – then the servers should be delivered in 2025. Elon Musk said that “the table stakes to be competitive in AI at this point are at least several hundred million dollars per year,” and he is clearly paying to play.
It’s not clear what the servers will be used for, but it is likely that they are all for xAI’s supercomputer project “Colossus,” being built in Memphis with a mix Dell and Supermicro server. Dell is said to be eager to provide the remaining servers to complete the project.
The deal with xAI “will firmly establish the company’s position as a leader in AI-server providers and boost sales,” Bloomberg Intelligence analyst Woo Jin Ho noted.
“Analysts project that the value of AI servers will increase to $14 billion by the end of the fiscal year in January 2026,” Bloomberg added.
