Elon Musk and GrokAI Split from Oracle: How xAI Plans to Lead the AI Race with Its Own Data Center

Going it alone? Elon Musk’s xAI is now moving on from Oracle’s $10bn server deal amidst plans to construct a newer, more state-of-the-art data centre.

Elon Musk’s AI Startup xAI Cancels Major Server Deal

Elon Musk’s artificial intelligence company, xAI, has terminated a $10 billion server deal with Oracle. Initially, xAI rented 24,000 Nvidia H100 GPUs from Oracle to train its Grok 2 AI chatbot. However, Musk announced that xAI is now building its own data center with 100,000 Nvidia H100 GPUs to ensure faster and more efficient AI training. Grok 2 is expected to launch in August, with Grok 3 anticipated by the end of the year.

Building the World’s Most Powerful AI Training Cluster

Musk revealed that xAI’s decision to build its own data centre was driven by the need to maintain a competitive edge. The new system will be the world’s most powerful training cluster, aiming to start operations later this month. Musk emphasised that controlling their own infrastructure is crucial to achieving faster AI development than competitors, ensuring xAI’s leadership in the field.

Challenges and Future Prospects

The deal with Oracle was reportedly stalled due to Musk’s demand for a faster supercomputer than Oracle could deliver. Additionally, Oracle’s concerns about power supply at xAI’s preferred location contributed to the decision. Despite ending the contract, xAI continues to discuss its infrastructure needs with Oracle and other potential partners. This strategic move underscores Musk’s commitment to advancing AI technology at an unprecedented pace.

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