Home Mutual Funds Dell Stock in Focus on News Company Will Provide Server Racks to xAI Supercomputer

Dell Stock in Focus on News Company Will Provide Server Racks to xAI Supercomputer

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Key Takeaways

  • Dell shares, which have gained 10% over the past two trading sessions, remain in focus on Thursday after Elon Musk said that xAI will use the hardware giant’s server racks to build its supercomputer.
  • Dell CEO Michael Dell said in a separate post on Wednesday that the company has partnered with AI chipmaker Nvidia to build an AI factory to power xAI’s chatbot Grok.
  • Monitor how the Dell share price responds to its all-time high set last month at $179.70, with a volume-backed breakout potentially leading to a continuation of the move higher.

Dell (DELL) shares, which have gained 10% over the past two trading sessions, remain in focus on Thursday after Elon Musk said Wednesday that his artificial intelligence (AI) startup xAI will use the hardware giant’s server racks to build its supercomputer.

“To be precise, Dell is assembling half of the racks that are going into the supercomputer that xAI is building.” Musk said in a post on social media platform X. When prompted about xAI’s second partner, the Open AI co-founder replied “SMC,” referring to AI server maker Super Micro Computer (SMCI).

In a separate X post earlier on Wednesday, Dell CEO Michael Dell said that the company has partnered with AI chipmaker Nvidia (NVDA) to build an AI factory to power xAI’s chatbot Grok. Musk told investors earlier this year that xAI plans on building a supercomputer by the second half of 2025 to power future versions of Grok, according to technology industry-focused business publication, The Information.

In April, Musk said on an X Spaces interview with Norway wealth fund CEO Nicolai Tangen that about 20,000 Nvidia H100 graphic processing units (GPUs) were used to train Grok 2, adding that later models will require 100,000 of the highly sought after chips.

Musk’s recent comments about Dell will likely add to the bullish sentiment about the stock. On Monday, Dell jumped more than 5% after Morgan Stanley (MS) said that the company sits well positioned to sustain and potentially accelerate its momentum in AI servers. The stock jumped another 5% Tuesday after Bank Of America (BAC) noted that Dell has continued to see strong AI-server demand from second-tier cloud-computing vendors and enterprise customers, with the bank also pointing out opportunity from sovereign buyers.

Dell shares were up 3.1% at $153.79 about two hours before Thursday’s opening bell. U.S. markets were closed on Wednesday for the Juneteenth holiday.

Monitor This Key Chart Level Amid Ongoing Upward Momentum

Dell shares have remained in a longer-term uptrend since the 50-day moving average (MA) crossed above the 200-day MA to generate a golden cross chart pattern. More recently, the price gapped lower after the server maker missed Wall Street’s quarterly estimates, but promptly found buying interest near a horizontal line and the 50-day MA.

Looking ahead, if the stock continues its upward momentum, investors should monitor how the price responds to its all-time high (ATH) set last month at $179.70. A convincing breakout above this technically significant level backed by trading volume could see the shares continue their move higher.

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As of the date this article was written, the author does not own any of the above securities.

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