Elon Musk’s xAI artificial intelligence (AI) venture appears to be moving forward. The Tesla (NASDAQ:TSLA) CEO has been working on creating an AI supercomputer for months, but now two of the tech sector’s leading companies — neither of which are owned by Musk — are teaming up to create an AI factory to help power xAI’s supercomputer and Grok chatbot. The two firms in question are longstanding tech leader Dell Technologies (NYSE:DELL) and semiconductor giant Nvidia (NASDAQ:NVDA). Today, both NVDA and DELL stock are rising as anticipation mounts for this AI partnership.
These aren’t the only tech stocks that stand to benefit from a partnership with Musk’s company. But if plans for the factory progress, both companies could see significant growth over the coming year.
What’s Happening With DELL Stock?
After falling sharply one month ago, DELL stock needed a catalyst. Thankfully, it seems to have found one. Shares initially rose today as markets opened and are currently up about 1%. Meanwhile, NVDA stock is up 2% on news of the Musk partnership.
As a tech company that doesn’t make as many headlines as some of its peers, there’s no question that Dell will benefit from this partnership. CEO Michael Dell announced the news yesterday morning with a post on his X account:
In a separate post, Musk provided further context on the partnership. “To be precise, Dell is assembling half of the racks that are going into the supercomputer that xAI is building,” he stated.
Musk also named Super Micro Computer (NASDAQ:SMCI) as a fellow partner. So far, SMCI stock is having a better trading day than either DELL stock or NVDA, with gains of around 8% as of this writing.
What It Means
Dell is best known as a maker of affordable personal computers. But these days, most aspiring tech investors are primarily concerned with AI — specifically how companies are implementing AI in their offerings as the market booms. Since Dell hasn’t been as quick to board the AI train as some competitors, news of his partnership with Nvidia comes at an excellent time. At $152 per share, DELL stock still trades at much lower levels than SMCI stock as well. That could make it an appealing play for investors looking to cash in on the AI race, especially as they can’t directly bet on xAI yet.
Additionally, the company’s foray into AI has been going well, according to recent sales figures. As InvestorPlace contributor Joel Baglole reports:
“When releasing its first-quarter financial results, Dell’s management team noted that shipments of its AI-optimized servers rose more than 100% sequentially to $1.7 billion. The company’s backlog of orders for AI servers increased 30% during Q1 to $3.8 billion from $2.9 billion at the end of the previous quarter. Dell said AI server sales rose 42% year-over-year to $5.5 billion and demand is growing.”
If the partnership with Nvidia progresses, DELL stock could be among this year’s AI breakouts. Working with Musk could help spur growth for both Dell and Nvidia, provided that the controversial CEO stays focused on his mission of building out an AI supercomputer.
On the date of publication, Samuel O’Brient held a long position in NVDA stock. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
