Elon Musk SpaceX
Elon Musk's AI startup, xAI, partners with Dell & Super Micro to build a massive supercomputer. This news sent their stock prices soaring as AI competition heats up. Wikimedia Commons

Elon Musk's announcement that Dell and Super Micro Computer will supply servers for xAI's supercomputer triggered a surge in the stock prices of both companies on Thursday.

Elon Musk further clarified in an X post that Dell will provide half the server racks for xAI's supercomputer, with Super Micro also contributing. Super Micro's stock price significantly outperformed Dell's, surging over eight per cent in recent trading, while Dell's stock price only rose by one per cent, according to a CNBC report.

Elon Musk has ambitious plans for supercomputer development, including a $500 million "Dojo" supercomputer in Buffalo, New York, and another high-density, water-cooled cluster at Tesla's factory in Austin, Texas. In May, Elon Musk revealed plans to build a massive supercomputer, called the "gigafactory of compute," to fuel the growth of his AI company, xAI.

Last year, Musk established xAI, an artificial intelligence startup aiming to compete with Microsoft-backed OpenAI and Google AI, a subsidiary of Alphabet. Interestingly, Musk himself was a co-founder of OpenAI.

AI Arms Race Heats Up

Musk's involvement with AI research has taken a complex path. After co-founding OpenAI, he severed ties in 2018 due to disagreements over the company's direction. He even refused shares in OpenAI, citing concerns about its legal structure.

Michael Dell, CEO of Dell, announced on an X post on Wednesday that his company is collaborating with Nvidia to build a specialised facility, a "Dell AI factory," to provide the computing power needed for Elon Musk's AI chatbot, Grok.

Michael Dell
Michael Dell announces building a Dell AI factory with NVIDIA to power xAI's Grok bot. Twitter / Michael Dell @MichaelDell

While Musk initially stated Dell would build the entire supercomputer, he later clarified they'd only assemble half the server racks. When questioned about the other half, Musk replied, "SMC," implying Super Micro Computer would handle that portion.

Musk's announcement regarding a supercomputer for his AI startup, xAI, came on June 10, a US holiday when markets were closed. Despite the timing, investors reacted positively by buying Dell and Super Micro stock the next trading day.

This surge reflects the optimism surrounding both companies' involvement in the booming AI sector. Both Dell and Super Micro were already taking strides in AI.

Dell And Super Micro Capitalise On AI Boom

Super Micro announced a Silicon Valley facility expansion earlier this week to support their AI business. Last month, Dell reported that AI server revenue had more than doubled compared to the previous quarter.

Despite significant progress from tech giants like Microsoft and Alphabet (Google's parent company), Musk is determined to establish xAI as a frontrunner in artificial intelligence (AI). Last month, investors fueled the intensifying competition in artificial intelligence by injecting $6 billion into Series B funding for Musk's AI company, xAI.

This investment valued the company at $24 billion, demonstrating strong backing for established tech giants and emerging players like xAI in the AI race. Not only are established tech giants battling for AI dominance, but Apple (AAPL) has also thrown its hat into the ring.

Previously hesitant to reveal its AI plans, Apple unveiled its strategic vision, including the Apple Intelligence platform, at its recent Worldwide Developers Conference. This unveiling signifies a significant shift for Apple, who will soon integrate various AI features into their products and operating systems.

Tech giants have seen their stock prices soar due to AI excitement, but none have surpassed Nvidia (NVDA), the chipmaker that has become synonymous with the AI boom.

On Thursday, Nvidia further solidified its position as the world's most valuable company. This comes after surpassing Microsoft earlier in the week. The company's stock price continued to rise, buoyed by positive announcements from Dell and Super Micro.