Oracle deal falls through

Musk’s AI company wants to build supercomputers itself

A planned billion-euro deal between Oracle and Elon Musk's AI startup xAI has fallen through. On Tuesday, xAI and Tesla boss Musk declared on his short message service X that the company would now build its own data center with 100,000 H100 processors from Nvidia.

Previously, the medium "The Information" had reported that talks about the deal with a potential value of ten billion dollars (9.23 billion euros) had ended. Among other things, Oracle considered the construction time demanded by Musk to be unrealistic, according to several people involved in the negotiations. Oracle had also expressed concerns about the power supply.

"Have to take the steering wheel into their own hands"
The deal was intended to extend an existing agreement in which xAI rents Nvidia chips for artificial intelligence from the cloud provider. However, Musk wrote on X that xAI needs to be faster than any other AI company in order to compete. "If our fate depends on being the fastest by far, we need to take the wheel ourselves instead of sitting in the back seat." An Oracle statement was not initially available.

Grok 2 before release
xAI currently offers the Grok chatbot, a generative AI that basically uses the same technology as ChatGPT from Microsoft partner OpenAI. Musk has now explained that the successor Grok 2 has been trained using 24,000 H100 chips leased from Oracle and is likely to be released next month. The new system with 100,000 H100s will be "by far the most powerful training cluster in the world", Musk continued.