Tech giant Oracle and Elon Musk’s artificial intelligence startup xAI have ended talks on a potential $10 billion cloud IT agreement. Oracle’s shares fell 3% to close at $140.68 on Tuesday following the news.
The discussions, which began in May, were focused on a multi-year deal for Oracle to provide cloud servers to xAI for training large language models. However, both companies have decided to terminate the negotiations.
Elon Musk, the founder of xAI, stated in a post on X that their core competitiveness relies on being faster than any other AI company, which led them to walk away from the deal. xAI has chosen to construct its data center in Memphis, Tennessee, using NVIDIA chips supplied by Dell and Supermicro.
Musk’s company plans to acquire 100,000 NVIDIA processors to create what he claims will be the most potent AI training pool globally. As part of the Oracle-Microsoft agreement, 100,000 Nvidia GB200 chips are expected to be available by the second quarter of 2025. Oracle will buy the chips from Nvidia and lease them to Microsoft for use by OpenAI.
Additionally, xAI has already purchased 24,000 NVIDIA H100 chips through Oracle, using them to train its upcoming Grok 2, set to launch next month. Musk highlighted the need for xAI to have full control of its AI capabilities to maintain its position as a leading AI company.
The decision to part ways with Oracle marks a shift in strategy for xAI, as the company opts to build its infrastructure rather than rely on external providers. Despite Oracle being recognized as a top-tier company, xAI’s focus on speed and autonomy has led to this direction. This move underlines xAI’s ambition to establish itself as a frontrunner in the competitive AI landscape.
Overall, the conclusion of the talks between Oracle and xAI signifies a significant development in the ongoing evolution of the AI industry. Musk’s commitment to pushing the boundaries of AI technology remains unwavering, as xAI continues to forge its path toward unlocking new possibilities in artificial intelligence.
Article Source
https://analyticsindiamag.com/oracle-xai-cloud-deal-falls-through-musks-startup-to-build-own-data-center/
