XAI Appears to Confirm Ended Talks with Oracle Over Expanded AI Chips Agreement

By Sabela Ojea

Elon Musk appeared to confirm that xAI has ended talks to expand an existing arrangement with Oracle to rent Nvidia chips as his AI company builds a data center in Memphis, Tenn.

Musk on Tuesday posted on X that the decision to end the talks, first reported by The Information, comes as xAI builds "the most powerful training cluster in the world by a large margin."

Data centers house the supercomputers used to train the language models powering generative-AI applications like ChatGPT.

Musk launched xAI last summer after seeing the breakneck success of OpenAI's ChatGPT chatbot. Since then, he has ramped up his efforts, poaching dozens of engineers from other companies including Tesla, and releasing a chatbot called Grok.

Musk said xAI is building a supercomputer with 100,000 Nvidia graphics processing units, the chips behind training and operating generative AI programs. The AI company was contracting 24,000 Nvidia chips from Oracle, according to Musk.

"Our fundamental competitiveness depends on being faster than any other AI company," Musk said. "This is the only way to catch up."

The news come about a month after The Wall Street Journal reported that xAI was planning to build a supercomputer in Memphis, Tenn., to catch up to rivals that have had yearslong head starts developing generative AI.

Oracle shares were down 3% to $140.80 in afternoon trading. The stock has jumped 34% since the beginning of the year.

Write to Sabela Ojea at [e-mail]; @sabelaojeaguix

(END) Dow Jones Newswires

07-09-24 1453ET