Elon Musk's X, Hewlett Packard Strike $1 Billion AI Server Deal: Report

Hewlett Packard Enterprise (HPE) has reportedly secured a lucrative deal worth over $1 billion to supply servers optimized for artificial intelligence to Elon Musk's social media platform, X. According to a Bloomberg News report, the deal was finalized late last year, positioning HPE as a key supplier for X's expanding AI infrastructure. The agreement underscores the growing demand for specialized servers capable of handling the intensive computational demands of AI technologies.

The AI server market has been expanding, with businesses increasingly looking for hardware that can support artificial intelligence applications. Musk's companies, including Tesla and xAI, have emerged as prominent clients for such hardware. The deal between HPE and X was finalized late last year, with competitors Dell Technologies Inc. DELL and Super Micro Computer Inc. SMCI also vying for the contract.

HPE's success in securing the deal is a noteworthy endorsement of its AI server capabilities, which had previously been considered somewhat behind those of its rivals. The AI servers in question are equipped with advanced chips from companies like Nvidia Corp. (NASDAQ:NVDA), which has seen explosive growth and a consequent boost in revenue for its server and system vendor clients.

The deal could mark a turning point for HPE's AI server business, which Chief Financial Officer Marie Myers discussed in a December earnings call. Myers highlighted the expectation of growing AI system adoption by enterprises and governments, though she noted that order patterns are anticipated to remain competitive and sporadic.

HPE's stock saw a notable uptick, climbing over 3% in afternoon trading on Friday, following the news. Investors responded positively to the news, signaling confidence in the company's future prospects within the rapidly expanding AI sector. The partnership also strengthens HPE's ties to Musk's business ventures, which include high-profile companies like Tesla.



Meanwhile, Musk's social media platform, X, is facing competition from Bluesky, a rival platform that is reportedly nearing a $700 million valuation. However, the deal with HPE is a significant vote of confidence in X's AI capabilities and growth potential.

In conclusion, the deal between HPE and X is a testament to the growing demand for AI-optimized servers and the potential for strategic partnerships between tech giants and AI hardware providers. As AI continues to permeate various industries, the market for AI servers is expected to grow, presenting opportunities for companies like HPE to expand their market share and solidify their position in the AI hardware landscape.