Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.
In a surprising move, Elon Musk has reportedly instructed Nvidia (NASDAQ: NVDA) to prioritize the delivery of AI chips to his companies, X and xAI, at the expense of Tesla (NASDAQ: TSLA). This decision has caused significant delays in Tesla’s receipt of over $500 million of processors, pushing the car company’s timeline back by several months.
Nvidia has refrained from commenting on the situation, while Tesla’s stock experienced a nearly 1% dip in premarket trading following the news. Internal emails from Nvidia revealed Musk’s directive and its conflict with previous procurement plans for Tesla.
xAI Will Receive 100,000 Nvidia AI Chips by End of the Year
The redirected AI chips have led to setbacks in Tesla’s efforts to establish supercomputers crucial for developing autonomous vehicles and robots. This situation highlights the ongoing conflicts of interest as Musk manages multiple companies simultaneously, raising concerns among Tesla shareholders about his divided attention and its potential impact on the company’s performance and strategic goals.
Launched by Elon Musk in 2023, xAI is an AI startup closely tied to X (formerly Twitter), sharing data center resources and investors. The company aims to develop generative AI products and position itself as a competitor to OpenAI. xAI will receive 100,000 Nvidia AI chips by the end of 2024, indicating a significant investment in AI infrastructure. The startup has secured $6 billion in financing, supported by investors from Musk’s Twitter acquisition. xAI’s main product is a chatbot named Grok, which is marketed as a politically incorrect alternative to ChatGPT.
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Tesla Stock Dips in Premarket on the News
Tesla’s stock closed at $176.29, down 1.01%, with a market capitalization of $562.224 billion. The stock has decreased by 29.05% year-to-date. The company’s trailing P/E ratio is 45.11, while the forward P/E is 70.92. Tesla’s profit margin stands at 14.37%, with a return on assets (ROA) of 4.72% and a return on equity (ROE) of 23.74%. The total revenue for the trailing twelve months (ttm) is $94.75 billion. Tesla’s stock declined nearly 1% in premarket trading following the announcement about the AI chips, and the stock’s 52-week range indicates volatility over the past year.
Tesla continues to face significant competition and internal challenges, including an aging vehicle lineup and strategic shifts towards AI and robotics.
Do you think the change in focus could affect Tesla in the long-term? Let us know in the comments below.
Disclaimer: The author does not hold or have a position in any securities discussed in the article.
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