HPE is likely to become a supplier of AI-optimized servers for Elon Musk’s X social network (Twitter). The deal is reportedly worth more than $1 billion and, according to Bloomberg, was reached at the end of 2024 based on information from informed sources. Dell Technologies and SuperMicro also applied to supply X equipment. HPE itself did not comment on the report.
The demand for AI computing has led to prosperity for manufacturers of powerful servers. Tesla and xAI are considered among the largest buyers of such equipment. For instance, the xAI Colossus supercomputer in Memphis (USA) runs on Dell and Supermicro servers. It is known that the businesses controlled by Musk quite freely exchange employees, technologies, and computing power if necessary. News of this potential HPE partnership had little effect on the stock prices of HPE, Dell, and Supermicro. Overall, despite growth, HPE’s AI server business has been lagging behind its competitors. However, it was precisely thanks to AI solutions that HPE closed Q4 with record revenue of $8.5 billion and doubled its profits. As a result, the deal with one of Musk’s companies became a kind of “vote of confidence” in HPE’s proposals.
According to Bloomberg Intelligence, a key argument in favor of HPE may have been its proprietary liquid cooling technology for servers. However, although large deals are good for overall sales, they can often act as a “brake” on margins. Curiously, 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 well-established AI-focused enterprises. The company also notes that its technologies are in high demand. Dell does not comment on the news.
Market Outlook and Ongoing Developments
HPE, meanwhile, expects growth in the implementation of AI systems by enterprises and governments in 2025, adds NIX Solutions. At the same time, the December earnings report stated that the market environment will remain highly competitive and volatile. We’ll keep you updated on any further developments regarding HPE’s deal with X and its impact on the broader AI server market.
According to Synergy Research Group, data center infrastructure spending in 2024 soared by 34% year-on-year to $282 billion. Last year, the main event in the AI market was the explosive growth of NVIDIA, which is indirectly evidenced by revenue increases seen among its customers—vendors engaged in AI server production. As the AI sector continues to expand, companies like HPE, Dell, and Supermicro may see further opportunities to meet the surging demand for high-performance computing solutions.