Elon Musk’s start-up xAI reportedly pulled the plug on a potential $10 billion deal with Oracle to rent cloud servers from the software company to build its AI-training infrastructure.

The Information reported xAI is now buying chips to build a data centre on its own instead of partnering with Oracle.

After The Information story was published, Musk stated on X that xAI opted to train its next major system internally using Nvidia’s H100 GPUs because “our fundamental competitiveness depends on being faster than any other AI company”.

Musk also stated xAI’s Grok 2 model was trained on 24,000 Nvidia H100 chips from Oracle and is “probably ready to release next month” after going through additional fine-tuning and bug fixes.

On an earnings call in September 2023, Oracle Chairman Larry Ellison stated his company had a deal in place with xAI to provide it with cloud infrastructure to train its AI models, but did not disclose the value or length of the deal.

The Information reported Musk demanded Oracle build a supercomputer faster than the tech giant deemed possible.

It also raised concerns with xAI that its preferred location had an inadequate power supply.