Dell, Super Micro Shares Jump on Reports of ‘AI Factory’ for xAI

The large-scale AI data center will feature hardware from Dell, Super Micro, and Nvidia.

Bloomberg News

June 21, 2024

2 Min Read
Dell servers in a cabinet at a data center

(Bloomberg) -- Dell Technologies shares rose on Thursday (June 20) after chief executive officer Michael Dell said the company is building a “Dell AI factory” for Elon Musk’s startup xAI alongside Nvidia Corporation. 

“We’re building a Dell AI factory with Nvidia to power Grok for xAI,” Michael Dell wrote in an X post on Wednesday.

Musk responded to comments about the post, saying that Super Micro Computer would also be providing servers. Super Micro’s X account replied to Musk with a celebration emoji and a link to its website. 

XAI will use Dell’s XE 9680 servers in the factory, a Dell spokesperson said in an email. “Our size, scale, and breadth of solutions position us well for large-scale projects like these,” the company said in a statement, adding that the size of its so-called graphics processing clusters allows it to train AI models faster.

A representative for Super Micro didn’t immediately respond to requests for comment and additional details. 

Both Dell and Super Micro are increasing their server capacity to win more business from companies building and working with artificial intelligence programs, which require more data processing power. Super Micro announced earlier this week that it plans to add three new facilities in Silicon Valley to support AI growth. Dell said last month that revenue from its servers equipped to handle AI tasks more than doubled last quarter from the period before and its backlog jumped.  

Related:Could AI Factories for a Single Tenant be the Latest Data Center Trend?

“Dell’s servers are for Elon Musk’s AI startup xAI, and likely to make up half of server volume, with the rest for Super Micro,” said Bloomberg Intelligence analyst Woo Jin Ho. “If the deployment is for Grok 3, which needs 100,000 Nvidia H100 GPUs, the xAI server deal might be worth $3 billion, assuming a price of $1 million per AI-server rack.”

Dell shares rose about 1% to $150.63 at 10:56 a.m. in New York trading after earlier gaining as much as 8.3%. Super Micro rose 8.2% to $995.45 after previously jumping 10%. Nvidia gained 2.5% to $138.94.

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