July 16, 2024

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Dell, Super Micro stocks rise after Musk says companies will supply hardware for xAI

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Shares of Dell (DELL) and Super Micro Computer (SMCI) popped Thursday after xAI Founder Elon Musk said the companies are providing hardware for the supercomputer his AI startup is building.

The moves higher underscore Wall Street’s excitement around AI technology.

Investors are clamoring to buy into AI businesses at every level of development, from major consumer-facing brands selling AI-powered apps to manufacturers providing the chips and servers powering the computing infrastructure.

Shares of Dell rose as high as 5% Thursday morning while Super Micro’s stock climbed nearly 9%.

Dell’s CEO Michael Dell set up the jump for his company’s share price when he said in a post on X Wednesday, “We’re building a Dell AI factory with Nvidia to power Grok for xAI.”

Musk, who owns X, clarified a few hours later, that Dell would be assembling half the racks that are going into the supercomputer. In response to comments asking who would be building the remaining half, Musk replied “SMC.”

The AI announcement took place over the Juneteenth holiday, when markets were closed. But investors poured into the stocks the following session.

FILE - Nvidia CEO Jensen Huang speaks at the Computex 2024 exhibition in Taipei, Taiwan, June 2, 2024. Nvidia passed Microsoft on Tuesday, June 18, 2024, to become the most valuable company in the S&P 500. (AP Photo/Chiang Ying-ying, File)

Nvidia CEO Jensen Huang has led the company as its market cap passed Microsoft on Tuesday, June 18, 2024, to become the most valuable company in the S&P 500. (AP Photo/Chiang Ying-ying, File) (ASSOCIATED PRESS)

Both Dell and Super Micro are working to capitalize on the immense growth surrounding AI technologies. Earlier this week Super Micro announced plans to expand facilities in Silicon Valley to bolster its AI business. And Dell reported last month that revenue from its AI servers more than doubled from the prior quarter.

Musk is also trying to position his startup as a leader in AI, even as tech giants Microsoft (MSFT) and Alphabet (GOOG, GOOGL), which owns Google, have made major inroads. His AI enterprise raised $6 billion in series B funding, backers announced last month, reaching a valuation of $24 billion, as investors bet on the dominant tech…

2024-06-20 11:36:07

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