Billionaire Elon Musk’s AI startup, xAI, and tech giant Oracle (ORCL.N) have terminated discussions regarding a potential $10 billion server deal, according to a report by The Information on Tuesday.
The discussions aimed to expand an existing arrangement where xAI rents Nvidia’s (NVDA.O) AI chips from Oracle’s cloud services. However, sources involved in the talks indicated that the negotiations have ended.
Musk stated on his social media platform X that xAI is independently building a system using Nvidia’s H100 graphics processing units for the fastest completion time.
A source familiar with the situation told Reuters that the specific server capacity Oracle was discussing with xAI has been allocated to another customer. The source added, “The company is always in discussion with customers about upcoming capacity and continues to engage with xAI on its infrastructure needs.”
A multi-year agreement to rent Nvidia processors from Oracle for a planned supercomputer was in progress but was delayed by issues such as Musk’s demands for a faster build than Oracle considered feasible. Additionally, Oracle raised concerns about the inadequate power supply at xAI’s preferred location, according to The Information.
Despite this, xAI still has a contract to train AI models in Oracle’s Gen2 Cloud.
