Talks on a possible $10 billion server agreement, in which the creator of Grok would have rented Nvidia’s AI chips from the cloud provider to train the AI chatbot, have apparently come to an end between Elon Musk’s artificial intelligence venture xAI and IT behemoth Oracle.
To train the Grok 2 AI chatbot, the company rented GPUs.
Musk claims that xAI trained Grok 2 on 24,000 Nvidia H100s GPUs that it purchased from Oracle. The company now sells Grok 1.5, however as of late, Musk announced that Grok 2 will launch in August of this year.
“Bug fixes and tweaks are being made to Grok 2. Ready for release maybe next month,” Musk continued.
Musk’s xAI is developing its own datacenter
The Information reported, citing multiple persons with knowledge of the discussions, that xAI is purchasing chips to construct a data center on its own. Musk subsequently verified this information in a post on X, his other business.
According to him, his AI business is developing a system that utilizes Nvidia’s H100 graphics processing units exclusively.
The 100k (100,000) H100 system itself is being constructed by xAI to have [the] quickest time to completion. intending to start instruction later this month. He continued, “It will be by far the most potent training cluster in the world.
We chose to develop the 100k H100 and the upcoming big system in-house since outperforming every other AI business in terms of speed is essential to our core competitiveness. Musk emphasized, “This is the only way to catch up.” Interestingly, Grok 3 is anticipated to release before the year ends.
Why xAI terminated its Oracle contract
According to the sources, negotiations were stalled by Musk’s insistence on building a supercomputer faster than Oracle thought feasible, despite an ongoing multi-year arrangement to rent Nvidia processors from Oracle for a projected supercomputer.
“Oracle is a fantastic company, and there is another that has potential involved in that OpenAI GB200 cluster, but we need to take control of the situation rather than sit back and wait for things to happen to us,” Musk wrote in his essay.
News agency Reuters stated that Oracle’s allotted capacity for xAI has been farmed out to a different customer, citing an individual familiar with the situation.
The insider stated, “The company continues to engage with xAI on its infrastructure needs and is always in discussion with customers about upcoming capacity.” Oracle has expressed concern about the insufficient power supply at the preferred location of xAI.
