The Two Real Winners of the Musk-Nvidia AI Chip Story

In 2001, Steve Jobs famously said, “Innovation distinguishes between a leader and a follower.”

This timeless wisdom from the late tech genius rings true today with another of the most ubiquitous-yet-misunderstood pioneers of our time: Elon Musk.

Musk is a visionary. You may not agree with his every move, but there’s no doubting this fact.

From artificial intelligence (AI) to electric vehicles (EVs) to interplanetary spaceflight, Musk has a direct hand in the technologies that are shaping our future.

Yet the media loves to hate him.

Musk’s strategic use of Nvidia (NVDA) AI chips came under fire this week. Those mainstream outlets have painted his decision to allocate Nvidia chips from Tesla (TSLA) to his AI startup, xAI, as controversial.

But the reality reveals a different story.

The Real Story

When CNBC reported Musk’s directive to ship Nvidia chips to xAI, the media pounced.

Headlines like “Leaked Emails Show Elon Musk Diverting AI Resources Away from Tesla as Automaker Flails” aimed to criticize.

“Is Musk giving up on Tesla?” they pondered.

Unfortunately, these reports often miss crucial context in favor of sensationalism. They make bombastic claims to grab clicks – and unwitting investors get caught in the crossfire.

I don’t want that to be you.

Headlines like these are designed to prey on your emotions. Those emotions typically lead to bad investment decisions.

We don’t have to follow the crowd because we have data on our side.

So let’s take a step back from this latest Musk media frenzy to unpack the exciting truth at the bottom of it.

It revealed who the real winners are…

The Real Winners

One key takeaway from this story: Nvidia’s H100 GPUs are crucial for advanced AI tasks.

Musk’s move confirms that these chips remain in high demand from a multitude of sources. Whether Tesla uses it for Full Self-Driving (FSD) training or xAI uses it for its supercomputer, Nvidia reaps the benefits.

Tesla’s anticipated $3 to $4 billion payment to Nvidia this year underscores their strong partnership.

Nvidia stands as the undeniable winner here. And despite the media’s assumptions to the contrary, Musk’s chip reallocation actually benefits Tesla, too.

By sending chips to xAI, Musk keeps Tesla’s preferred customer status with Nvidia intact, which is critical, considering NVDA has far more demand than it can supply.

This strategic partnership avoids order delays or excessive and expensive inventory, which Tesla can’t yet handle due to infrastructure constraints. The south extension of Giga Texas, designed for 50,000 H100s, isn’t ready. It needs significant power and cooling.

By moving the current order to his other companies (which are paying the bill, not Telsa), Musk is displaying both strategic foresight and an incredible flexibility as a leading AI innovator – something other NVDA buyers simply cannot compete with.

The media’s response suggests a deeper political bias.

Since Musk bought Twitter and turned it into 𝕏, promoting free speech, he has faced increased scrutiny.

This criticism may stem from frustration with 𝕏’s rise as the top news app, disrupting traditional media narratives. It may stem from the untouchable influence Musk himself holds in defining our future.

Bottom line: Musk’s decision to reroute these AI chips is not a sign of Tesla’s decline but his innovative leadership. It strengthens Tesla’s partnership with Nvidia and propels xAI forward in the high-octane AI industry.

Let the media scrutinize. We’ll know who the real winners are: Nvidia and Musk’s visionary projects.

To learn more about the next big profit opportunities Musk is creating, click here.

Until next time,

Andy Swan
Founder, LikeFolio

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