Elon Musk Ordered Thousands of AI Chips from NVIDIA for X and xAI

Nvidia emails obtained by CNBC show that Elon Musk asked for thousands of AI chips made by Nvidia that were meant for Tesla to be sent to his social media company X instead. The action could put off by months Tesla’s plans to buy processors worth $500 million, according to the news source.

Musk says that Tesla should be buying a lot of Nvidia’s H100 AI chips so that it can become a leader in AI and robotics. Earlier this year, during a Tesla earnings call, he said that the company would buy 85,000 H100s instead of 35,000 by the end of this year. Next, Musk wrote on X that Tesla would spend $10 billion on combined training and inference AI, with the latter being mostly used in cars. But emails from Nvidia employees that CNBC got show that Musk may be lying about how many AI chips Tesla bought. Instead, a lot of those processors are on their way to X, mostly to its AI lab, xAI.

An Nvidia memo from December said, Elon is prioritising X H100 GPU cluster deployment at X versus Tesla by redirecting 12k of shipped H100 GPUs originally slated for Tesla to X instead.In exchange, original X orders for 12,000 H100s set to arrive in January and June will be sent to Tesla instead. Employees at Nvidia said in follow-up messages that Musk’s comments on X and during the earnings call conflict with bookings.

After CNBC’s story came out, Musk said in a post on X that Tesla couldn’t accept the Nvidia GPUs because the company’s factory in Austin, Texas, isn’t finished yet. He also thought that Tesla would buy Nvidia AI chips for $3–4 billion in 2024.

Tesla Investors’ Concerns and xAI’s Competitive Race

Tesla investors may be upset about the move to move AI chips from Tesla to X. These investors are betting that Musk will keep his promise to make cars fully autonomous. The business is planning to show off its first robotaxi at an event in August. Tesla’s Autopilot and Full Self-Driving driver-assist features, which are the foundation of the company’s work on autonomy, have been criticised for hundreds of crashes, dozens of which have killed people.

Musk’s AI company, xAI, is in a race with OpenAI, Google, and others to make useful apps for generative AI and the big language models that power them. The business announced a $6 billion funding round last month, based on the promise of high-tech products and the infrastructure to support them.

This is because of how popular its GPUs are; they help other companies with their AI goals and have made Nvidia the third most valuable company in the world. As a result of cloud computing and generative AI, customers “are consuming every GPU that’s out there,” Nvidia CEO Jensen Huang told CNBC in May during an earnings call. Revenue grew by 200 percent in the last quarter, according to the company.