Dell Technologies and Supermicro are building an AI factory with Nvidia for Elon Musk's xAI.
The buildout, announced in a post by Dell Technologies CEO Michael Dell, will power Grok, xAI's large language model.
Musk confirmed the deal in a post on X, but did note that Dell is assembling half the racks for the xAI supercomputer. He later added in a reply that Supermicro is doing the other half.
The xAI data center buildout highlights how infrastructure for generative AI has been a boom market and innovation hub. The profits, however, haven't trickled down to enterprise software vendors yet.
Dell Technologies outlined its AI factory strategy at Dell Technologies World. One part of the Dell strategy revolves around tight integration with Nvidia. The other half of that strategy will include AMD and other AI infrastructure players.
For Supermicro, the xAI deal will be a big win and also represents a close relationship with Nvidia. Supermicro built the first supercomputer for Nvidia a decade ago to work on AI. Supermicro CFO David Weigand said at a recent investment conference that the only thing holding the company's growth back has been supply. Supermicro's third quarter revenue was $3.85 billion, up 200% from a year ago.
Based on Supermicro's fourth quarter revenue outlook of $5.1 billion to $5.5 billion, the company is north of a $20 billion annual revenue run rate.
"The only thing that has restrained us to date is supply. There's no question that we would be further ahead in the numbers because that's why what's caused our backlog to grow, we'd be further ahead if we had more supply," said Weigand.
He added that the competition for AI infrastructure is only going to heat up. This week, HPE announced a broad partnership with Nvidia.
Weigand said:
"Everyone is running and rushing to the party. This is nothing new to us. It's really a lot of the same players out there. With the number of employees that we have, we're half engineers. We're very focused on what we do. We're not trying to be all things to all people. We're trying to build the very best customized servers and for some of the best companies in the world."
