Elon Musk and Nvidia (NVDA): Media Bias and the Real Winners

June 5, 2024

In 2001, Steve Jobs said, "Innovation distinguishes between a leader and a follower."

This rings true today with Elon Musk and his strategic use of Nvidia (NVDA) AI chips.

Recent media reports have painted Musk's decision to allocate Nvidia chips from Tesla (TSLA) to his AI startup, xAI, as controversial.

But the reality reveals a different 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.

However, these reports often miss crucial context, favoring sensationalism.

Nvidia stands as the undeniable winner here.

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 used by Tesla for Full Self-Driving (FSD) training or by xAI for its supercomputer, Nvidia benefits greatly. Tesla's anticipated $3-4 billion payment to Nvidia this year underscores their strong partnership.

Musk’s chip reallocation benefits Tesla.

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 delays in orders 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.

Musk’s decision 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 AI industry.

While the media continues to scrutinize, the real winners are Nvidia and Musk’s visionary projects.

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