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Friday, June 21, 2024

Elon Musk’s xAI partnership boosts Dell and Super Micro Computer shares

Founded last year, xAI aims to compete with established AI giants like Microsoft-backed OpenAI and Alphabet’s Google.

Shares of Dell Technologies and Super Micro Computer saw significant increases on Thursday, June 20, following a major announcement from Elon Musk. The surge in stock prices came after Musk disclosed that these companies would supply servers for his artificial intelligence (AI) startup xAI’s supercomputer project.

Strategic Partnership for xAI’s Supercomputers

Elon Musk, the CEO of Tesla and founder of xAI, revealed on Wednesday, June 19, via a post on his social media platform X (formerly known as Twitter), that Dell Technologies and Super Micro Computer would be key suppliers for the startup’s ambitious supercomputer endeavors. Musk specified that Dell is tasked with assembling half of the racks for the supercomputer, while Super Micro Computer will also play a significant role in the project.

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Stock Market Reaction

The announcement had an immediate positive impact on the stock prices of both companies. Dell Technologies’ shares rose by over 5% according to CNBC, while Super Micro Computer experienced an even more impressive spike of over 8% in recent trading sessions. This market reaction highlights investor confidence in the potential success and profitability of Musk’s supercomputer project.

$500 Million “Dojo” Supercomputer

Musk’s plans include constructing a $500 million supercomputer named “Dojo” in Buffalo, New York. Additionally, a “super dense, water-cooled supercomputer cluster” is slated for development at Tesla’s factory in Austin, Texas. These cutting-edge technologies are designed to enhance Tesla’s capabilities in computer vision and large language models, which are essential for the advancement of robots and autonomous vehicles.

Competitive Edge in the AI Race

Founded last year, xAI aims to compete with established AI giants like Microsoft-backed OpenAI and Alphabet’s Google. Musk, who co-founded OpenAI, is now leveraging his extensive experience and resources to propel xAI to the forefront of AI innovation. The involvement of Dell Technologies and Super Micro Computer is a strategic move to ensure that xAI has the necessary hardware to support its advanced AI initiatives.

Dell’s Collaboration with Nvidia

In a related development, Michael Dell, CEO of Dell Technologies, announced on Wednesday that Dell is creating a “Dell AI factory” in collaboration with Nvidia to support Musk’s AI bot, Grok. This partnership further solidifies Dell’s position in the AI hardware market and highlights the company’s commitment to advancing AI technology.

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Musk’s announcement also hinted at the extensive use of Nvidia’s Blackwell chips for the supercomputer project, with estimates suggesting that up to 300,000 of these chips might be required. Musk indicated that the supercomputer could be operational in just a few months, reflecting the rapid pace at which xAI is moving forward.