The AI wars are heating up, and Elon Musk has joined the fray. X’s chatbot, Grok, is Musk’s answer to OpenAI’s ChatGPT. While Musk has previously promoted Tesla (NASDAQ:TSLA) as one of the top AI stocks because of its self-driving technology, his attention has been drawn to Grok.
In May, xAI announced a $6 billion Series B round of funding from Saudi Arabia’s Prince Alwaleed bin Talal, Andreessen Horowitz, Sequoia Capital and others. The funding will allow xAI to rapidly upgrade Grok and catch up with ChatGPT and Anthropic’s Crowd.
Part of that money will go to employees. The battle for AI talent is heating up as big tech companies and startups scramble to hire talented engineers. It’s now not uncommon for top AI engineers to earn more than $1 million a year.
The remaining funds will be used for infrastructure such as AI servers, storage, and networking. These AI stocks are the main suppliers for the xAI Grok project and will benefit from increased capital expenditures by xAI.
Nvidia (NVDA)
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As a leading provider of AI chips, anyone developing large-scale language models or AI chatbots will need to build on Nvidia’s (NASDAQ:NVDA) infrastructure. Musk has relied on the semiconductor giant for Tesla’s AI projects, and he’ll be relying on Nvidia’s hardware to power Grok as well.
According to information, xAI has acquired more than 20,000 Nvidia H100 GPUs for training the Grok 2 model in 2023. However, the chatbot still lags behind the latest GPT 4o and Claude 3.5 performance, so Elon Musk needs to invest more in hardware and training to make xAI one of the top AI companies.
Musk estimates that the upcoming version, Grok 3, will require many more resources to train the models, including more than 100,000 Nvidia H100 GPUs. In fact, these are very expensive chips, costing about $30,000 each, so an order from xAI would be a big boost to Nvidia’s revenue.
Going forward, NVIDIA will likely remain one of the top AI stocks. At this point, the company’s dominance in AI chips is all but unchallenged. The company unveiled its next-generation AI chip architecture, Blackwell, at its GTC conference in March and is expected to start shipping later this year. After all, companies that want to dominate the AI era want the best hardware — and that’s NVIDIA hardware.
Dell Technologies (DELL)
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Another company that will directly benefit from Grok’s investment is Dell Technologies (NYSE:DELL). The company is well-positioned in the AI server market, catering to the needs of cloud service providers and startups like xAI, and its latest announcement that it will help power Grok makes it one of the top AI stocks.
DELL has emerged as a leader in the AI server market due to its engineering advantages and technological differentiation. Customers like Grok prefer customizable solutions that provide end-to-end solutions. Dell Technologies offers comprehensive AI server solutions that include design, integration, deployment, optimization, and support services.
On June 20, Elon Musk revealed that Dell is one of the suppliers assembling the company’s AI servers. In a post on X, the billionaire revealed that Dell Technologies is manufacturing half of the racks that will power xAI’s supercomputer. Later, Michael Dell hinted at an AI factory being built in partnership with Nvidia.
Finally, beyond Grok, Dell Technologies has hundreds of AI server clients that have backlogged orders that guarantee demand through 2025, making Dell Technologies one of the top AI stocks for 2025. Morgan Stanley believes momentum for DELL’s AI servers will accelerate, with a target price of $200 in the bull case.
Super Microcomputer (SMCI)
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Year-to-date (YTD), Supermicro Computer (NASDAQ:SMCI) is one of the top AI stocks. Though the stock has fallen from highs of over $1,200, it is up 196% YTD as of this writing, and the gains are likely to continue as the company benefits from Grok.
As mentioned above, xAI is building an AI factory to power its latest Grok model. Super Micro Computer is one of the AI stocks well positioned to make money, especially since it has a competitive advantage in AI servers with massive liquid cooling, allowing it to ship over 2,000 racks of AI servers per month.
So it wasn’t a surprise when CNBC reported that Super Micro Computer would also supply xAI. The company can customize its AI server racks into application-specific platforms depending on the needs of its customers. What’s more, its fully functional plug-and-play systems are exactly what xAI needs to rapidly scale Grok training.
Considering this revenue growth, Supermicro’s rally isn’t over yet and there is room for further growth. Bank of America (NYSE:BAC) expects the company to benefit from strong demand from tier 2 cloud service providers and the government. The company’s target price of $1,090 is more than 25% higher than current levels.
On the date of publication, Charles Muni did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the author in accordance with InvestorPlace.com’s Publishing Guidelines.
Charles Munyi has extensive writing experience across various industries including personal finance, insurance, technology, wealth management, stock investing, etc. He has written articles for various financial websites such as Benzinga, The Balance, and Investopedia.