Elon Musk's xAI nears $10 billion deal to rent Oracle's AI servers, The Information reports


xAI logo is seen near computer motherboard in this illustration taken January 8, 2024. REUTERS/Dado Ruvic/Illustration/File Photo

(Reuters) -Elon Musk's artificial intelligence startup xAI has been talking to Oracle executives about spending $10 billion to rent cloud servers from the company over a period of years, The Information reported on Tuesday, citing a person involved in the talks.

The deal would make xAI one of Oracle's largest customers, the report said, as Musk looks to raise funds for xAI in an attempt to rival the AI offerings of OpenAI and Google.

The cloud negotiations are ongoing and there is no guarantee that the two companies will sign a deal, the report added.

XAI was reportedly in talks to raise $3 billion in a round last month, which would have valued the company at $18 billion.

Oracle and Elon Musk did not immediately respond to Reuters requests for comment.

Oracle's co-founder Larry Ellison, a self-described close friend of Elon Musk, announced in September that Musk's startup had signed a contract to train AI models in Oracle's Gen2 Cloud.

Oracle released an update to its database technology earlier this month intended to make it more useful with AI.

XAI is the largest H100 customer at Oracle, using more than 15,000 of the AI chips, the report said. H100 is an AI chip made by Nvidia.

Last month, Musk said xAI would launch an enhanced version of its chatbot Grok to early testers and existing users on his social media platform X.

(Reporting by Zaheer Kachwala in Bengaluru; Editing by Shailesh Kuber)

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