Dell's $5 billion deal with Elon

Welcome to AI Collision 💥,

In today’s collision between AI and our world:

That time Nvidia was at a 20% discount
Dell’s $5 billion deal with Elon
Which stalwart looks good from here?

If that’s enough to get the stalwarts rising, read on…

AI Collision 💥

Remember this?

It’s the meme that spoke 1,000 words when DeepSeek’s release tanked AI stocks in the US market.

That trading session on the Monday after DeepSeek started getting huge traction on social media wiped over $1 trillion off the US markets. More if you count the global reverberations.

Nvidia (NVDA) alone saw $500 billion melt off its market cap. From a high of $148.97 on the Friday, Nvidia touched a low of $116 on the Monday. Within the week it traded down to $113 – 24% down from a week prior.

It was the perfect example of market overreaction.

At the time we wrote,

…come to think of it… long term it doesn’t really impact any of the Mag 7. Thinking about it even more, China has delivered the greatest gift to AI investors since Japan’s unwinding of the carry trade.

China just made AI stocks (and anything even related to AI stocks – like bitcoin miners and SMR nuclear tech companies) anywhere from 10% to 20% cheaper.

And we asked a very simple question, should you be worried about any of the madness the release of DeepSeek brought with it?

Our response,

…not one bit. This is a timeline accelerator, meaning demand will lift, Nvidia will still remain the main player, and companies like Meta, Amazon, Alphabet and Microsoft won’t scale back the investment – they’ll keep ramping it up but just getting way more bang for their buck.

That line again… Nvidia will still remain the main player.

Nothing about that statement has changed. And you only need to look to Elon Musk’s xAI release of Grok-3 this week to see how Nvidia remains the main player.

It took xAI 122 days to build its first phase of the Colossus AI cluster – 100,000 Nvidia H100 GPUs. Phase 2 took 92 days to double that to 200,000 Nvidia H100 GPUs.

Do you think xAI stops there? Or do you think it doubles it again to 400,000 H100 GPUs?

And from there? When a company like xAI, Tesla, Meta, Google, Microsoft or OpenAI is looking to accelerate its AI clusters, or build new ones, what do you think it’s fitting into those?

I’ll give you an idea.

This was posted by Michael Dell last year. These are the server racks Dell (DELL) was shipping to xAI for its Colossus AI cluster.

And now it looks like Dell’s on the verge of locking another deal with xAI worth around $5 billion to provide more server racks like these. And what do you think are the GPUs that would exist inside the next batch of racks heading to xAI?

Nvidia.

The market has figured out there’s no change to business when it comes to AI scaling up. That’s probably why Nvidia’s stock price is back in the $140 range, and why Dell is up 7% for the week so far.

What’s interesting is that names like Dell, IBM (IBM), HP Inc. (HPQ) and Intel (INTC) are now all finding momentum as they find their lane in the provision of infrastructure for the AI revolution.

These stalwarts looked like they might fall to the wayside only a couple of years ago as the likes of Nvidia and AMD (AMD) rose to dominate the hardware market. But the old timers are making a comeback. While they might not be at Nvidia’s level, they are certainly finding other ways to generate huge revenues from the rollout of AI.

But are they good buys? We’ll take a look because Intel looks like it might break up (much like HP and Hewlett Packard Enterprise (HPE) did a few years ago). The idea of that sent the stock over 15% higher. HPE is inking new server deals. Dell is clearly friendly with both Elon Musk and the Trump administration. So the only question left is, do they deserve a position in your portfolio?

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Boomers & Busters 💰

AI and AI-related stocks moving and shaking up the markets this week. (All performance data below over the rolling week).

man in black suit jacket and black pants figurine

Boom 📈

Micron (NASDAQ:MU) up 13%
SK Kynix (KOR:A000660) up 10%
Intel (NASDAQ:INTC) up 14%

Bust 📉

BigBear.ai (NYSE:BBAI) down 19%
Meta (NASDAQ:META) down 4%
Palantir (NASDAQ:PLTR) down 5%

From the hive mind 🧠

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