Dell Technologies Inc. shares rose on Thursday after Chief Executive Officer Michael Dell said the company is building a “Dell AI factory” for Elon Musk’s startup xAI alongside Nvidia Corp. 

“We’re building a Dell AI factory with Nvidia to power Grok for xAI,” Michael Dell wrote in an X post on Wednesday.

Musk responded to comments about the post, saying that Super Micro Computer Inc. would also be providing servers. Super Micro’s X account replied to Musk with a celebration emoji and a link to its website. 

Representatives for Dell and Super Micro didn’t immediately respond to requests for comment and additional details. 

We’re building a Dell AI factory with @nvidia to power @grok for @xai @elonmusk pic.twitter.com/2aTYLtCBup

— Michael Dell (@MichaelDell) June 19, 2024

Both Dell and Super Micro are increasing their server capacity to win more business from companies building and working with artificial intelligence programs, which require more data processing power. Super Micro announced earlier this week that it plans to add three new facilities in Silicon Valley to support AI growth. Dell said last month that revenue from its servers equipped to handle AI tasks more than doubled last quarter from the period before and its backlog jumped.  

“Dell’s servers are for Elon Musk’s AI startup xAI, and likely to make up half of server volume, with the rest for Super Micro,” said Bloomberg Intelligence analyst Woo Jin Ho. “If the deployment is for Grok 3, which needs 100,000 Nvidia H100 GPUs, the xAI server deal might be worth US$3 billion, assuming a price of $1 million per AI-server rack.”

Dell shares were up 5 per cent at 9:51 a.m. in New York. Shares of Super Micro were up 9 per cent and Nvidia’s stock was up 3 per cent.

Musk launched xAI, an artificial intelligence startup, in July 2023 as an answer to OpenAI and its wildly popular chatbot, ChatGPT. Musk was instrumental to OpenAI’s founding, but withdrew his support and warned of the dangers of AI to humanity. The startup launched its ChatGPT competitor Grok last November and raised $6 billion in venture capital funding in May at a pre-money valuation of $18 billion.