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In a surprising decision, Elon Musk has reportedly instructed Nvidia to prioritize the delivery of AI chips to his companies, X and xAI, at the expense of Tesla. This move has caused significant delays in Tesla's receipt of processors worth over $500 million, leading to a delay in the car company's timeline.
Nvidia has refrained from commenting on the situation, and Tesla's stock experienced a nearly 1% decline in premarket trading following the revelation. Internal emails from Nvidia have unveiled Musk's directive and its conflict with previous procurement plans for Tesla.
xAI Scheduled to Receive 100,000 Nvidia AI Chips by Year's End
The redirection of AI chips has hindered Tesla's efforts to establish vital supercomputers essential for the development of autonomous vehicles and robots.
This scenario emphasizes the ongoing conflicts of interest as Musk handles multiple companies concurrently, stirring concerns among Tesla shareholders about his divided attention and its potential impact on the company's performance and strategic objectives.
Launched by Elon Musk in 2023, xAI is an AI startup closely associated with X (previously Twitter), sharing data center resources and investors. The company aims to develop generative AI products and position itself as a rival to OpenAI. xAI is set to receive 100,000 Nvidia AI chips by the conclusion of 2024, indicating a significant investment in AI infrastructure.
Backed by investors from Musk's Twitter acquisition, the startup has secured $6 billion in funding. Its primary product, a chatbot named Grok, is marketed as a controversial alternative to ChatGPT.
Tesla's Stock Decline Preannouncement
Tesla's stock closed at $176.29, registering a 1.01% decline, with a market capitalization of $562.224 billion. Year-to-date, the stock has decreased by 29.05%. The company's trailing P/E ratio is 45.11, and the forward P/E is 70.92. Tesla's profit margin is 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 is $94.75 billion.
Following the announcement on AI chips, Tesla's stock dipped nearly 1% in premarket trading. The stock's 52-week range portrays volatility over the past year.
Tesla confronts significant competition and internal challenges, including an aging vehicle lineup and strategic shifts towards AI and robotics.
How do you think the change in focus could impact Tesla in the long term? Share your views in the comments section below.
Disclaimer: The author does not have any positions in the mentioned securities.
