Oracle shares are declining after discussions between the company and Elon Musk’s AI startup xAI broke down. The failed talks centered around a potential extension of a previous agreement where xAI would lease Nvidia chips from Oracle. This deal, valued at $10 billion, would have made xAI one of Oracle’s largest clients, but it has now been called off.
With the partnership off the table, xAI will now independently construct the xAI100k H100 system by directly purchasing chips from Nvidia. The company plans to commence training next month, touting the xAI100k H100 system as the most powerful training cluster ever built.
Oracle CEO Ellison had previously highlighted the benefits of AI to the company’s revenue growth, using xAI as a prime example. However, tensions emerged as Musk demanded more GPUs than Oracle was willing to provide. Despite Ellison’s prior affiliation with Tesla’s board of directors until 2022, his relationship with Musk was unable to salvage the partnership.
Musk emphasized the importance of speed in AI development, citing the need for xAI to be the fastest in the field. As a result, xAI opted to take full control over its system’s progress rather than relying on external partnerships.
Although Oracle’s stock had been performing well year-to-date, with returns of over 33%, news of the failed partnership with xAI caused a more than 4% drop in the stock price. Investors seeking trading signals can sign up for Invezz Signals™ for free to access insights and guidance from professional traders in the cryptocurrency, forex, and stock markets.
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https://invezz.com/news/2024/07/09/oracle-stock-plunges-as-xai-talks-fail/