BTC+1.55%
Market Analysis
Nvidia Directed to Prioritize Chip Shipments for xAI Over Tesla, Stock Slides
Elon Musk has reportedly directed Nvidia to prioritize AI chip shipments to his companies, X and xAI, over Tesla, causing delays in Tesla's receipt of processors.
Editorial disclosureRead more
All reviews, research, news and assessments of any kind on The Tokenist are compiled using a strict editorial review process by our editorial team. Neither our writers nor our editors receive direct compensation of any kind to publish information on tokenist.com. Our company, Tokenist Media LLC, is community supported and may receive a small commission when you purchase products or services through links on our website. Click here for a full list of our partners and an in-depth explanation on how we get paid.
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.
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.
Tim Fries
Tim Fries is the cofounder of The Tokenist. He has a B. Sc. in Mechanical Engineering from the University of Michigan, and an MBA from the University of Chicago Booth School of Business. Tim served as a Senior Associate on the investment team at RW Baird's US Private Equity division, and is also the co-founder of Protective Technologies Capital, an investment firm specializing in sensing, protection and control solutions.
