Reasons Why xAI Oracle Deal Got Cancelled

As a crypto investor with experience in the AI sector, I’ve been closely following the developments between xAI and Oracle. While I acknowledge the potential of OpenAI and Sam Altman’s leadership, I’m more excited about xAI’s progress and their decision to take control of their infrastructure.


Elon Musk has made significant strides in the field of artificial intelligence (AI) through the establishment of two companies: OpenAI and xAI. OpenAI, which was founded first and is now led by Sam Altman, gained prominence as the creators of ChatGPT. Notably, OpenAI’s reputation has grown steadily under Altman’s leadership. However, xAI has risen to become a formidable competitor in this space. To power its AI chatbots, xAI employs advanced AI technology from Oracle and Nvidia, specifically their H100 GPUs equipped with state-of-the-art AI capabilities.

Disagreements Cut the xAI Oracle Deal.

As a crypto investor, I’ve been following the developments between Oracle and Elon Musk’s company closely. Initially, there was an agreement in place for Oracle to provide a supercomputer worth over $10 Billion as part of the xAI deal. The primary goal was to strengthen my own AI-training infrastructure, specifically for our Grok 2.0 AI chatbot.

When it comes to being the fastest in the field, particularly with regard to the OpenAI GB200 cluster, Oracle stands out as a reliable choice. However, another company holds promise as well. In critical situations where control is essential for success, it’s best to take the wheel yourself rather than relying on someone else to drive.

xAI Building A New Processing System

Following the completion of the xAI Oracle deal, Elon and his team have set their sights on constructing a 100k H100 processing system in Memphis, Tennessee, USA. This system will be the fastest in operation and will utilize Nvidia chips for its power source. Notably, we will be purchasing directly from Dell and Suprimecro for this project.

As an analyst, I’ve overseen the acquisition of 24,000 H100s from both Oracle and Grok 2. Currently, Grok 2 is undergoing the process of fine-tuning and addressing any lingering bugs in preparation for its anticipated release next month.

XAI is personally constructing its 100,000 H100 system to achieve the quickest development timeline. The training process is anticipated to commence towards the end of this month.

— Elon Musk (@elonmusk) July 9, 2024

As an analyst, I would rephrase it as follows: I’m currently observing that Musk’s team is developing Grok 3.0, an advanced AI chatbot with a zesty twist, aimed for release by year-end. Grok 1.5 is already accessible to the public, while Grok 2.0 is scheduled to go live in August.

As a researcher examining the current situation, I’d rephrase it this way: The xAI project continues to lease 16,000 Nvidia chips from Oracle for training our AI models. Meanwhile, Oracle has entered into a partnership with Microsoft, enabling them to utilize Nvidia-equipped servers for managing OpenAI workloads.

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2024-07-10 19:13