Elon Musk’s artificial intelligence (AI) startup xAI is in talks with Oracle (NYSE:) executives about a $10 billion deal to rent cloud servers, the Information reported on Tuesday, citing a source familiar with the situation.

Oracle shares rose 3.6% on the day.

A potential deal would make xAI one of Oracle’s largest customers as Musk seeks to raise funds to compete with AI giants OpenAI and Google (NASDAQ:)

While the negotiations are ongoing, there is no certainty that the two companies will reach an agreement. Last month, xAI was reportedly in talks to raise $3 billion, which would value the company at $18 billion.

Oracle’s co-founder Larry Ellison, a close friend of Musk, announced in September that xAI had signed a contract to train AI models in Oracle’s Gen2 Cloud. Earlier this month, Oracle released an update to its database technology to enhance its AI capabilities.

xAI is Oracle’s largest customer for Nvidia’s (NVDA) H100 AI chips, utilizing over 15,000 of these chips. In April, Musk said that xAI would launch an enhanced version of its chatbot Grok to early testers and existing users on his social media platform X.





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