According to media reports, Elon Musk's AI startup xAI and IT giant Oracle Corporation (NYSE: ORCL) have halted negotiations for a $10 billion server deal.

It is reported that xAI and Oracle have stopped negotiations to extend the existing agreement, under which xAI rents NVIDIA (NASDAQ: NVDA) AI chips from cloud provider Oracle.

In a post on his social media platform X, Musk mentioned that xAI is developing a system that will fully rely on NVIDIA's H100 GPUs to complete projects at the fastest speed.

Sources revealed that the dedicated capacity Oracle provided to xAI has already been signed by another customer. He stated, "The company continues to engage in conversations with customers about upcoming capacity and continues to work with xAI to meet their infrastructure needs."

A multi-year lease agreement was in the works, involving xAI renting NVIDIA processors from Oracle for a planned supercomputer. However, negotiations have stalled due to issues such as Musk's proposed build speed exceeding what Oracle deemed feasible and concerns about insufficient power supply at the location chosen by xAI.

Despite this, xAI has already signed a contract to utilize Oracle's Gen2 Cloud for AI model training.