Elon Musk's generative AI startup xAI has ended talks to increase its use of Oracle Cloud significantly.

The Information reports that discussions ceased after the company could not meet Musk's timeline demands, with xAI instead opting to build its own supercomputer in Memphis.

Oracle plane upside down
– Sebastian Moss

xAI already rents around 16,000 Nvidia GPUs from Oracle, making it one of the largest customers of the cloud service.

Earlier this year, the AI startup was in discussion with Oracle about a $10 billion multi-year cloud deal, but talks broke down over xAI’s timeline demands and Oracle's concerns that the startup's preferred location did not have access to an adequate power supply,

Instead, xAI plans to build "the world’s most powerful supercomputer" in Memphis, Tennessee. Musk said that he expects the supercomputer to open by the fall of 2025.

Musk has claimed that xAI will deploy a 100,000 H100 liquid-cooled training cluster within the next few months, and another 300,000 GPU B200 cluster from next summer.

xAI also uses Amazon Web Services and spare capacity at X/Twitter data centers.

Update: Elon Musk confirmed the news on X, adding:

"xAI contracted for 24k H100s from Oracle and Grok 2 trained on those. Grok 2 is going through finetuning and bug fixes. Probably ready to release next month. xAI is building the 100k H100 system itself for fastest time to completion. Aiming to begin training later this month. It will be the most powerful training cluster in the world by a large margin.

"The reason we decided to do the 100k H100 and next major system internally was that our fundamental competitiveness depends on being faster than any other AI company. This is the only way to catch up.

"Oracle is a great company and there is another company that shows promise also involved in that OpenAI GB200 cluster, but, when our fate depends on being the fastest by far, we must have our own hands on the steering wheel, rather than be a backseat driver."