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(Bloomberg) -- Hewlett Packard Enterprise Co. won a deal worth more than $1 billion to provide Elon Musk’s X social network with servers optimized for artificial intelligence work.
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The agreement was reached late last year, according to people familiar with the matter who asked to remain anonymous because the deal was private. Competitors Dell Technologies Inc. and Super Micro Computer Inc. also bid to sell the equipment.
HPE declined to comment.
Demand for computing to run AI workloads has led to a boom for makers of high-powered servers like HPE. Musk’s companies including Tesla Inc. and xAI have emerged as major customers for the hardware. A supercomputer project being built by xAI in Memphis has used a mix of Dell and Super Micro servers.
Firms that Musk runs are known to share employees, technology and computing power. AI startup xAI’s main product, a chatbot called Grok, has primarily been available to paying users of X, the social network formerly known as Twitter.
The shares of HPE jumped as much as 4.3% before paring some gains to close less than 1% higher at $22.08 in New York. Dell stock slipped 3.8% to $114.77. Super Micro shares were little changed at $32.60.
While growing, HPE’s AI server business had been seen as a relative laggard compared with Dell and Super Micro. The deal with Musk’s company represents a vote of confidence for HPE’s offerings. AI servers contain high-powered chips from companies including Nvidia Corp.
HPE’s liquid-cooling technology may have played a role in the win, wrote Woo Jin Ho, an analyst at Bloomberg Intelligence. While good for sales, larger deals can be a drag on margins, he added.
In a statement, Super Micro said it continues “to have strong partnerships with all of our customers, including X, as we build world-leading AI-data centers,” and that its “liquid-cooled technology remains in high demand.” Dell didn’t comment. X failed to respond to requests for comment.
In 2025, HPE anticipates “growing adoption of AI systems by enterprises and sovereigns, although we expect orders to remain competitive and lumpy,” Chief Financial Officer Marie Myers said during a December earnings call.
Data center infrastructure spending is estimated to have jumped 34% to $282 billion in 2024, according to a report from Synergy Research Group. “The big story among vendors was the explosive growth of Nvidia,” analysts at Synergy wrote, adding that “much of this showed up through increased revenues for its server and system vendor clients.”