HPE will apparently become a supplier of servers optimized for AI tasks on Elon Musk’s social network X (Twitter). The transaction amount will be more than $1 billion. The agreement was reached at the end of 2024, Bloomberg reports, citing informed sources. Dell Technologies and SuperMicro also submitted an application for the supply of X equipment. HPE itself does not comment on the message.
The demand for AI computing is leading to the prosperity of manufacturers of powerful servers. Tesla and xAI are considered to be among the largest buyers of related equipment. Thus, the xAI Colossus supercomputer in Memphis (USA) uses Dell and Supermicro servers. It is known that businesses controlled by Musk, if necessary, quite freely exchange employees, technologies and computing power.
The news had little impact on the stock prices of HPE, Dell and Supermicro. In general, despite the growth, HPE’s AI server business lags somewhat behind competitors, although it was thanks to AI solutions that HPE completed the fourth quarter for the first time with record revenue of $8.5 billion and doubled profit. The deal with one of Musk’s companies became a kind of “vote of confidence” in HPE’s proposals.
Image Source: HPE
According to Bloomberg Intelligence, the argument in favor of HPE may have been its proprietary liquid cooling technology for servers. True, although large transactions are good for overall sales, they can often turn out to be a kind of drag on margins. It is curious that at the end of last year, HPE refused to sell $700 million worth of AI servers to an unnamed customer.
Supermicro announced that it continues to maintain strong partnerships with counterparties including. The company also notes that its technologies are in great demand. Dell does not comment on the news. HPE expects an increase in the adoption of AI systems by enterprises and governments in 2025. However, during the December earnings report it was stated that the market environment will remain highly competitive and unstable.
According to Synergy Research Group, spending on data center infrastructure in 2024 soared 34% year-on-year to $282 billion. Last year, the main event in the AI market was the explosive growth of NVIDIA. As Synergy Research states, this is indirectly evidenced by the growth in income of its clients – vendors involved in the production of AI servers.