- Bloomberg reports that the contact is with Elon Musk’s X social media platform
- xAi’s Colossus uses 100,000 Nvidia H100 GPU and doesn’t appear to be part of the contract
- Supermicro has had problems but is still a major player in AI hardware
The increasing demand for computing power to support AI workloads has led to rapid growth in the market for high-powered servers. It’s a lucrative business for companies like Dell, Supermicro and Hewlett Packard Enterprise, all of which have seen increased demand for their high-performance server products in recent years.
A report from Bloomberg claims that HPE has secured a massive deal worth more than $1 billion to supply Elon Musk’s X social network with servers optimized for artificial intelligence work.
The report doesn’t specify exactly how the servers will be used, but since it’s for X, there’s a good chance some of the capacity will be for Grok, the social network’s AI chatbot. In late 2024, X announced that it was rolling out Grok-2 to all users for free, and it’s fair to conclude that additional capacity will require more server infrastructure.
Dell and Supermicro outbid
Bloomberg says X’s deal with HPE was done in late 2024, according to people familiar with the matter.
Musk’s companies, including xAI and Tesla, are big buyers of AI hardware. The Colossus supercomputer, built by xAI in Memphis, was previously declared by Musk to be the “most powerful AI training system in the world.” The billionaire said it was built “from start to finish” in just 122 days.
Colossus uses 100,000 Nvidia H100 GPUs, but there are plans to massively expand operations. Supermicro has faced some challenges recently, including the resignation of its auditor and other related matters. However, as MarketWatch reports, it remains a “major player in the AI revolution” and recently established operations in Memphis to support xAI’s goal of building a supercomputing facility with 1 million GPUs.
Supermicro and Dell originally supplied the servers for Colossus, and Bloomberg says that while both companies bid to supply the equipment for this new venture, they were ultimately unsuccessful.
Bloomberg‘s report notes, “HPE’s liquid cooling technology may have played a role in the win,” wrote Woo Jin Ho, an analyst at Bloomberg Intelligence. While that’s good for sales, bigger deals can be a drag on margins, he added.”
