On Tuesday, May 14th, media reports cited informed sources involved in the negotiations as saying that xAI, an artificial intelligence startup under Musk established in July last year, is close to reaching a $10 billion agreement to lease AI servers from Oracle for multiple years.
The report stated that this deal would make xAI one of Oracle's largest customers. The $10 billion transaction size is similar to deals reached by xAI's competitors such as OpenAI and Anthropic with Microsoft, Amazon, and Google, who are also competitors of Oracle's cloud business.
This will also be the latest collaboration between Musk and his &#34;close friend,&#34; Oracle's co-founder Larry Ellison.
Two months ago, there were reports that Musk's space exploration and transportation company SpaceX was collaborating with Oracle to help American farms use artificial intelligence tools to plan and predict agricultural yields.
Ellison has repeatedly stated that he is a &#34;very close friend&#34; of Musk. He served on Tesla's board of directors from 2018 to 2022 and has also helped Musk in acquiring the social networking platform Twitter.
Meanwhile, xAI is in the process of completing a $3 billion to $6 billion equity financing round. Reports on this emerged a few weeks ago, with some media predicting the specific details of the financing round to be announced last week. It is said that after the successful financing, xAI's valuation will be close to $18 billion.
Some analysts speculate that it is unclear whether Oracle will invest in xAI through the opportunity of AI server cooperation in the latest equity financing round. Previous reports indicated that Sequoia Capital would participate in the financing.
Most of the funds from this round of financing may be used to accelerate the leasing of artificial intelligence chips to improve xAI's generative conversational AI chatbot Grok. Therefore, some speculate that the size of the $10 billion cloud agreement implies that xAI will need to raise more funds in the future to pay for cloud costs.
According to informed sources recently involved in potential financing negotiations with xAI, Musk hinted that he is &#34;one of the few executives who can raise enough funds to compete with other leading artificial intelligence companies.&#34;
Last month, Musk stated that xAI will need 100,000 Nvidia H100 GPU chips to train the Grok 3.0 model, currently using around 20,000 H100 chips to train the 2.0 version. It is reported that Musk aims to achieve the goal of 100,000 GPUs by the second half of 2025.
Currently, by investing in OpenAI, Microsoft is able to allow the former to lease AI servers with its high-end chips, while Amazon and Google also collaborate with the artificial intelligence startup Anthropic using the same business logic.
Oracle has become the preferred GPU supplier for a number of smaller-scale AI startups, which sometimes struggle to obtain an adequate number of GPUs. Some analysts also claim that Oracle is one of the first suppliers to adopt Nvidia's latest and most powerful Blackwell server chips
Larry Ellison revealed in March that 40 companies have committed to investing over $1 billion in Oracle Cloud, mainly for accessing GPU servers. There are also insiders who revealed that xAI is already Oracle's largest H100 customer, using over 15,000 chips.
However, Musk's xAI and Ellison's Oracle are still striving to catch up with their respective competitors in the AI field. The attractiveness of their collaboration lies in the fact that Oracle, as a cloud provider, does not do business with (what Musk looks down upon) OpenAI and Anthropic.
Not only is the GPU capacity of Oracle Cloud significantly lower than that of Amazon AWS and Microsoft Azure, Musk's vision for xAI to use 100,000 H100s by the end of next year is also less than Meta's plan to deploy 350,000 H100 chips by the end of this year. In addition, Microsoft hopes to provide servers capable of accommodating hundreds of thousands of GPUs for OpenAI in the next two years, and the two are also discussing the development of a supercomputer worth $100 billion.
Oracle's stock price surged straight up during Tuesday's midday trading session, rising as much as 5.3%, marking the largest intraday gain in at least two months since March 12th, with the stock price rebounding to a one-month high. Some netizens referred to it as another display of &#34;Musk Magic&#34;

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This will be the latest "cuddling together" cooperation in the AI field between Musk and his "close friend", Oracle co-founder Ellison. Some speculate that the $10 billion cloud agreement indicates that xAI will need to raise more funds in the future to pay for cloud costs. Oracle's stock price soared more than 5%, marking the largest intraday gain in two months

Musk's xAI, close to reaching a $10 billion agreement, will lease AI servers from Oracle