Elon Musk reveals Dell and SMCI as xAI suppliers

Elon Musk just revealed Super Micro Computer Inc (NASDAQ: SMCI) and Dell Technologies Inc (NYSE: DELL) as providers of servers to xAI – his artificial intelligence startup committed to building a supercomputer. 

Shares of both hardware firms are gaining on Thursday. 

Musk named Dell and Supermicro on X.com

Elon Musk is committed to building “Dojo” – a $500 million supercomputer in Buffalo, NY. On X.com, the billionaire wrote this morning:

Dell is assembling half of the racks that are going into the supercomputer that xAI is building. 

Supermicro, he added, is helping as well. The news arrives more than a month after SMCI reported revenue for its third quarter that missed Street estimates. The AI servers company still issued upbeat guidance for the future at the time. 

Super Micro stock is currently down close to 20% versus its year-to-date high. 

Dell CEO confirmed working with xAI

Elon Musk is also committed to building a “super dense, water-cooled supercomputer cluster” at his facility in Austin, Texas. 

The technology is aimed at serving Tesla Inc in enabling computer vision and building large language models required for autonomous driving. 

On Thursday, Michael Dell – the chief executive of Dell Technologies also confirmed on X.com that his company is working on a “Dell AI factory” in collaboration with Nvidia to power Grok – a gen AI chatbot developed by xAI. 

In May, the multinational said its revenue topped Street estimates in the first financial quarter on the back of strength in its infrastructure solutions segment. 

Street’s view on DELL and SMCI shares

Dell Technologies and Super Micro Computer are currently two of the largest names in the AI servers space globally.

That’s part of the reason why Morgan Stanley analyst Erik Woodring continues to recommend buying DELL shares even though they have more than doubled since the start of 2024. His recent research note reads:

Take advantage of recent post-earnings underperformance and well-telegraphed selling pressure from a large shareholder … to buy the dip on a leading AI infrastructure player trading at a relative discount to peers.

Wall Street also currently has a consensus “overweight” rating on Supermicro stock. Analysts see upside in the AI servers manufacturer to $1,059 on average which translates to about a 10% upside from here.

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