Elon Musk’s AI Company to Build Its Own Supercomputer

A billion-dollar deal between cloud provider Oracle and Elon Musk’s AI startup has fallen through. Instead, xAI will build a supercomputer itself, Musk announced.

Elon Musk has decided to build his own data center instead of pursuing a planned billion-dollar deal between cloud provider Oracle and his AI startup, xAI. This new data center is expected to house 100,000 Nvidia H100 processors, Musk shared on the platform X.

Earlier, The Information reported that talks about the agreement, potentially worth ten billion dollars, had ended. Oracle reportedly found the construction timeline demanded by Musk to be unrealistic, according to several sources involved in the negotiations cited by The Information. Additionally, the cloud provider had concerns about power supply issues.

The deal was supposed to expand an existing agreement under which Musk’s startup rents Nvidia chips for AI from Oracle. Musk commented on X that xAI needs to be faster than any other AI company to remain competitive. “If our fate depends on being the fastest by far, we need to take the wheel ourselves instead of sitting in the back seat,” he wrote. Oracle has not yet provided a statement on the matter.

Currently, xAI offers the chatbot Grok, a generative AI that fundamentally uses the same technology as ChatGPT. Musk announced that the successor, Grok 2, was trained using 24,000 H100 chips rented from Oracle and is expected to be released next month.