Elon Musk's X, Hewlett Packard Strike $1 Billion AI Server Deal: Report

Hewlett Packard Enterprise Co HPE has reportedly secured a deal worth over $1 billion to supply servers optimized for artificial intelligence to Elon Musk‘s social media platform, X.

What Happened: The deal between HP and X was finalized late last year, Bloomberg News reported on Friday, citing sources familiar with the matter.

The servers are tailored for AI applications, a segment witnessing robust demand from enterprises. Competitors Dell Technologies Inc. DELL and Super Micro Computer Inc. SMCI also vied for the contract.

The market for AI servers has been expanding, with businesses increasingly looking for hardware that can support artificial intelligence applications. Companies under Musk’s leadership, including Tesla Inc. TSLA and xAI, have become prominent clients for such hardware.

Why It Matters: Musk’s interest in AI is well-documented. In a recent discussion, Musk predicted that AI could reach human-level capabilities by 2029. "I certainly feel comfortable saying that it's getting 10 times better per year which is, let's say, four years from now that would mean 10,000 times better," Musk said.

His AI startup, xAI, is also making strides, with Musk announcing the integration of its Grok chatbot into Tesla vehicles soon. Musk shared the update during a live stream on X, stating, “Grok in Teslas is coming soon. You will be able to talk to your Tesla and ask for anything.”

Meanwhile, Musk’s social media platform, X, is facing competition from Bluesky, a rival platform that is reportedly nearing a $700 million valuation.

Price Action: On Friday, HPE stock saw a 0.23% increase, according to Benzinga Pro data.

The latest analyst ratings for Hewlett Packard Enterprise Co. were issued by Deutsche Bank, Loop Capital, and Barclays on Dec. 19, Dec. 9, and Dec. 6, respectively. With an average price target of $25.33 across these firms, the ratings suggest an implied upside of 14.01% for the company.