The company plans to supply servers equipped with Nvidia Corp. GB200 semiconductors to Musk’s AI startup within this year, as reported by sources who requested anonymity due to the confidential nature of the arrangement. Some aspects of the deal are still being finalized and may be subject to change, according to these individuals.
The surge in demand for computing power to support AI applications has resulted in significant growth for manufacturers of high-performance servers, such as Dell, Super Micro Computer Inc., and Hewlett Packard Enterprise Co. Musk’s enterprises, including Tesla Inc. and xAI, have become prominent clients for this hardware.
Dell and Nvidia chose not to comment on the matter, while xAI did not respond to a request for information.
Following the announcement, Dell's stock rose by as much as 6% to $116.88 on Friday before settling back slightly. The stock had previously declined by 4.3% this year up until Thursday’s market close.
xAI is developing a supercomputer in Memphis that utilizes a combination of Dell and Super Micro servers. In December, Dell reported the deployment of tens of thousands of graphics processing units (GPUs) at this site and expressed its intention to capture a significant portion of the ongoing expansion. GPUs are essential for powering AI workloads, with Nvidia being the leading manufacturer of these chips.
Analysts predict that Dell will have shipped over $10 billion worth of AI servers in the fiscal year that ended last month, with expectations for that figure to rise to $14 billion in the fiscal year concluding in January 2026. Dell is set to announce its fiscal fourth-quarter earnings on February 27, with a particular emphasis on the AI server segment being of great interest to investors.
According to Woo Jin Ho, an analyst at Bloomberg Intelligence, the agreement with xAI would solidify the company’s position as a top provider of AI servers and enhance sales, although the effect on profitability remains uncertain.
xAI’s primary offering, a chatbot named Grok, has mainly been accessible to subscribers of X, the social media platform formerly known as Twitter. Companies under Musk’s leadership are known to share resources, including employees, technology, and computing capabilities.