Elon Musk's artificial intelligence startup xAI is in talks with Oracle on a multiyear, $10 billion cloud-computing deal, The Information reported Tuesday. Oracle stock jumped on the news.
Musk's xAI startup would become one of Oracle's largest customers, according to the report. The Information cited a person involved in the talks. The year-old xAI hopes to challenge OpenAI as a developer of large language models that power generative AI tools.
On the stock market today, Oracle stock is up more than 3% at 119.89. Shares jumped as high as 122 following the news before easing back slightly.
Oracle Stock: Cloud Push
The deal would mark a win for the Oracle Cloud Infrastructure business, which is competing against industry heavyweights Amazon and Microsoft. Analysts see the offering as a potential growth driver for Oracle as companies adopt generative AI, which requires massive data and computing power. Oracle's stock took a hit late last year as sales growth slowed for the business.
But shares bounced back after a strong February-quarter report, in which Oracle said cloud infrastructure revenue increased 49% year over year to $1.9 billion.
Musk's startup and Oracle have worked together before. In December, Oracle Chairman Larry Ellison said the company provided high-powered computing chips from Nvidia to support xAI.
"We gave them quite a few," Ellison said on an analyst call. "But they wanted more, and we are in the process of getting them more."
Meanwhile, xAi is in talks to raise up to $6 billion in equity funding, according to a report from Bloomberg in late April.
Oracle did not immediately return a request for comment on The Information's report.
If Tuesday's gains hold, Oracle stock will be ahead 14% this year, compared to a 9.4% gain for the S&P 500.
