Elon Musk’s xAI And Oracle End Talks On Potential $10 Billion Nvidia Server Deal

Musk's xAI is independently building a system using Nvidia's H100 graphics processing units (GPUs) to expedite project completion, as Musk shared on his social media platform, X.
Elon Musk

Elon Musk

Elon Musk's AI startup, xAI, and Oracle have ended discussions about a potential $10 billion server deal, as reported by The Information. These talks aimed to expand their existing agreement, under which xAI has been renting Nvidia AI chips from Oracle's cloud services. Musk's xAI is independently building a system using Nvidia's H100 graphics processing units (GPUs) to expedite project completion, as Musk shared on his social media platform, X.
The discussions were intended to establish a multi-year agreement for renting Nvidia processors from Oracle to develop a planned supercomputer. However, the negotiations stalled due to several issues, including Musk's ambitious demands to construct a supercomputer at a speed Oracle deemed unrealistic. Additionally, Oracle raised concerns about the power supply adequacy at xAI's preferred location for the supercomputer.
Despite the conclusion of these talks, xAI continues to maintain a contract with Oracle for training AI models in Oracle's Gen2 Cloud. Oracle remains engaged with xAI regarding its infrastructure needs and is constantly in discussions with customers about upcoming capacity, according to a source familiar with the matter. The specific capacity initially discussed with xAI has since been allocated to another customer.
xAI, a startup founded by Musk, focuses on building advanced AI systems. Nvidia's H100 GPUs, known for their high performance in AI tasks, are central to xAI's current system-building efforts. Oracle's involvement in providing these GPUs highlights the tech giant's role in supporting AI research and development through its cloud services. However, the challenges faced during the negotiations underscore the complexities involved in scaling up AI infrastructure, particularly regarding location logistics and technological feasibility.
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