Hewlett Packard Enterprise (HPE) has secured a significant contract, exceeding $1 billion, to supply Elon Musk’s social media platform, X, with advanced servers specifically designed for artificial intelligence (AI) processing. This deal, finalized late last year, positions HPE as a key player in the rapidly expanding AI infrastructure market.
The agreement involved a competitive bidding process, with Dell Technologies and Super Micro Computer also vying for the contract. The demand for high-powered servers capable of handling complex AI workloads has surged, driven by the increasing adoption of AI across various industries. Musk’s ventures, including Tesla and xAI, have emerged as prominent consumers of this technology. Notably, xAI’s supercomputer project in Memphis utilizes a combination of Dell and Super Micro servers.
Companies under Musk’s leadership are known for their collaborative approach, often sharing resources such as personnel, technology, and computing power. This synergy is evident in the integration of xAI’s chatbot, Grok, primarily offered to paid subscribers of X (formerly Twitter).
HPE’s AI Server Win: A Boost for the Company
This substantial contract with X signifies a major win for HPE, bolstering its position in the competitive AI server market. While previously perceived as trailing behind Dell and Super Micro in this sector, the deal validates the capabilities of HPE’s offerings. AI servers typically incorporate powerful chips from leading manufacturers like Nvidia.
HPE’s advanced liquid-cooling technology may have been a contributing factor in securing the contract, according to Bloomberg Intelligence analyst Woo Jin Ho. While such large-scale deals can positively impact sales figures, they may also exert pressure on profit margins.
Super Micro, in an official statement, affirmed its continued strong partnerships with all clients, including X, emphasizing its commitment to constructing world-leading AI data centers and the sustained high demand for its liquid-cooled solutions. Dell declined to comment, and X did not respond to requests for comment.
The Expanding AI Infrastructure Market
During a December earnings call, HPE’s Chief Financial Officer, Marie Myers, projected increased adoption of AI systems by both enterprises and governments in 2025, acknowledging the anticipated competitiveness and potential fluctuations in orders.
Synergy Research Group estimates a 34% surge in data center infrastructure spending in 2024, reaching $282 billion. Synergy analysts highlighted the remarkable growth of Nvidia, primarily reflected in the increased revenues of its server and system vendor partners. This growth underscores the broader trend of increasing investment in AI infrastructure, a market in which HPE is now firmly positioned thanks to its deal with X. This strategic partnership with Musk’s X not only reinforces HPE’s capabilities in the AI sector but also contributes to the ongoing expansion of the AI infrastructure landscape.
