Nvidia, now the third-most-valuable company in the world with a $2.8 trillion market cap, has said it’s hard to keep up with demand. Between the cloud service providers and the companies developing AI models, customers “are consuming every GPU that’s out there,” Nvidia CEO Jensen Huang said on an earnings call in May, after the chipmaker reported its third straight quarter of more than 200% revenue growth.
Huang also said, on an earnings call in February, that Nvidia does its best to “allocate fairly and to avoid allocating unnecessarily,” adding “why allocate something when the data center’s not ready?”
In naming customers that are already using Nvidia’s next-generation Blackwell platform, Huang mentioned xAI on the May call alongside six of the biggest tech companies on the planet as well as Tesla.
Jensen Huang, co-founder and chief executive officer of Nvidia Corp., speaks during the Nvidia GPU Technology Conference in San Jose, California, March 19, 2024.
David Paul Morris | Bloomberg | Getty Images
Musk likes to tout his infrastructure spending at both companies.
At Tesla, Musk has promised to build a $500 million “Dojo” supercomputer in Buffalo, New York, and a “super dense, water-cooled supercomputer cluster” at the company’s factory in Austin, Texas. The technology would potentially help Tesla develop the computer vision and LLMs needed for robots and autonomous vehicles.
At xAI, which is racing to compete with OpenAI, Anthropic, Google and others in developing generative AI products, Musk is also seeking to build “the world’s largest GPU cluster” in North Dakota, with some capacity online in June, according to an internal Nvidia email from February.
The memo described a “Musk mandate” to make all 100,000 chips available to xAI by the end of 2024. It noted that the LLM behind xAI’s Grok was relying on Amazon and Oracle cloud infrastructure, with X providing additional data center capacity.
The Information previously reported some details of xAI’s data center ambitions.
On May 26, xAI said it closed a $6 billion financing round led by many of the same investors who funded Musk’s Twitter takeover. The company was incorporated in March 2023, but Tesla didn’t disclose its formation at the time, and it was four months later before Musk publicly introduced the startup.
While Musk has said for years that Tesla is a leader in AI, he wrote in a post on X in January that he’d want more control over the company before pushing further in that direction.
“I am uncomfortable growing Tesla to be a leader in AI & robotics without having ~25% voting control. Enough to be influential, but not so much that I can’t be overturned,” he said in the post.
Tesla’s latest proxy filing indicates Musk has 20.5% of the company’s outstanding shares, a figure that includes options awarded to Musk as part of his unprecedented 2018 CEO pay package. A Delaware court has ordered that compensation to be rescinded. Post-trial proceedings are ongoing and subject to appeal.
If he is unable to reach his desired ownership mark, Musk said in the January post, he “would prefer to build products outside of Tesla.” He’s already doing that at xAI.
Musk’s comments in the January post rankled some longstanding bulls, including the company’s largest retail shareholder, Leo Koguan, and Gerber Kawasaki’s Ross Gerber, who characterized his demand as “blackmail.”
Joel Fleming, a securities litigator at Equity Litigation Group, said that by letting his private companies skip ahead of Tesla in procuring critical hardware, Musk is making his conflicts of interest readily apparent.
“When you have someone like Mr. Musk who is a fiduciary to multiple companies, the law recognizes this creates conflict,” Fleming said. “If you owe fiduciary duties to two or more companies that are competing over the same things, you may end up channeling corporate opportunity away from one company to another.”
Fleming, who frequently represents public company investors in shareholder disputes, said that in such situations, other executives would be in the best position to make decisions, while those who are conflicted should abstain.
“That has not historically been the path that Mr. Musk has chosen for himself,” Fleming said.
Musk hasn’t been shy about intermingling corporate resources among his companies.
For example, following his buyout of Twitter, Musk enlisted dozens of Autopilot software engineers and other technical and administrative employees from Tesla to help him make sweeping changes at the company. Some employees even work for two Musk companies at once.
At xAI, Musk has also attracted employees away from Tesla, including machine-learning scientist Ethan Knight, and at least four other former Tesla employees who had been involved in Autopilot and big data projects there before joining the startup.
A former Tesla supply chain analyst, who asked not to be named in order to discuss sensitive matters, told CNBC that Musk has always considered his companies as an extension of his persona and believed he can do whatever he wants with them. That includes Tesla’s 2016 acquisition of SolarCity, where he was chairman and a top shareholder.
However, the person said, redirecting a large shipment of chips from Tesla to X is extreme, given the scarcity of Nvidia’s technology. The decision means the automaker willingly gave up precious time that could have been used to build out its supercomputer cluster in Texas or New York and advance the models behind its self-driving software and robotics.
In a post on X following publication of this story, Musk wrote, “Tesla had no place to send the Nvidia chips to turn them on, so they would have just sat in the warehouse.” He said the “south extension” of the Texas Gigafactory will soon “house 50k H100s” for training of self-driving technology.
Musk later added that, of Tesla’s $10 billion in “AI-related expenditures” this year, $3 billion to $4 billion will go to purchasing Nvidia hardware.
Huang also said, on an earnings call in February, that Nvidia does its best to “allocate fairly and to avoid allocating unnecessarily,” adding “why allocate something when the data center’s not ready?”
In naming customers that are already using Nvidia’s next-generation Blackwell platform, Huang mentioned xAI on the May call alongside six of the biggest tech companies on the planet as well as Tesla.
Jensen Huang, co-founder and chief executive officer of Nvidia Corp., speaks during the Nvidia GPU Technology Conference in San Jose, California, March 19, 2024.
David Paul Morris | Bloomberg | Getty Images
Musk likes to tout his infrastructure spending at both companies.
At Tesla, Musk has promised to build a $500 million “Dojo” supercomputer in Buffalo, New York, and a “super dense, water-cooled supercomputer cluster” at the company’s factory in Austin, Texas. The technology would potentially help Tesla develop the computer vision and LLMs needed for robots and autonomous vehicles.
At xAI, which is racing to compete with OpenAI, Anthropic, Google and others in developing generative AI products, Musk is also seeking to build “the world’s largest GPU cluster” in North Dakota, with some capacity online in June, according to an internal Nvidia email from February.
The memo described a “Musk mandate” to make all 100,000 chips available to xAI by the end of 2024. It noted that the LLM behind xAI’s Grok was relying on Amazon and Oracle cloud infrastructure, with X providing additional data center capacity.
The Information previously reported some details of xAI’s data center ambitions.
On May 26, xAI said it closed a $6 billion financing round led by many of the same investors who funded Musk’s Twitter takeover. The company was incorporated in March 2023, but Tesla didn’t disclose its formation at the time, and it was four months later before Musk publicly introduced the startup.
While Musk has said for years that Tesla is a leader in AI, he wrote in a post on X in January that he’d want more control over the company before pushing further in that direction.
“I am uncomfortable growing Tesla to be a leader in AI & robotics without having ~25% voting control. Enough to be influential, but not so much that I can’t be overturned,” he said in the post.
Tesla’s latest proxy filing indicates Musk has 20.5% of the company’s outstanding shares, a figure that includes options awarded to Musk as part of his unprecedented 2018 CEO pay package. A Delaware court has ordered that compensation to be rescinded. Post-trial proceedings are ongoing and subject to appeal.
If he is unable to reach his desired ownership mark, Musk said in the January post, he “would prefer to build products outside of Tesla.” He’s already doing that at xAI.
Musk’s comments in the January post rankled some longstanding bulls, including the company’s largest retail shareholder, Leo Koguan, and Gerber Kawasaki’s Ross Gerber, who characterized his demand as “blackmail.”
Joel Fleming, a securities litigator at Equity Litigation Group, said that by letting his private companies skip ahead of Tesla in procuring critical hardware, Musk is making his conflicts of interest readily apparent.
“When you have someone like Mr. Musk who is a fiduciary to multiple companies, the law recognizes this creates conflict,” Fleming said. “If you owe fiduciary duties to two or more companies that are competing over the same things, you may end up channeling corporate opportunity away from one company to another.”
Fleming, who frequently represents public company investors in shareholder disputes, said that in such situations, other executives would be in the best position to make decisions, while those who are conflicted should abstain.
“That has not historically been the path that Mr. Musk has chosen for himself,” Fleming said.
Musk hasn’t been shy about intermingling corporate resources among his companies.
For example, following his buyout of Twitter, Musk enlisted dozens of Autopilot software engineers and other technical and administrative employees from Tesla to help him make sweeping changes at the company. Some employees even work for two Musk companies at once.
At xAI, Musk has also attracted employees away from Tesla, including machine-learning scientist Ethan Knight, and at least four other former Tesla employees who had been involved in Autopilot and big data projects there before joining the startup.
A former Tesla supply chain analyst, who asked not to be named in order to discuss sensitive matters, told CNBC that Musk has always considered his companies as an extension of his persona and believed he can do whatever he wants with them. That includes Tesla’s 2016 acquisition of SolarCity, where he was chairman and a top shareholder.
However, the person said, redirecting a large shipment of chips from Tesla to X is extreme, given the scarcity of Nvidia’s technology. The decision means the automaker willingly gave up precious time that could have been used to build out its supercomputer cluster in Texas or New York and advance the models behind its self-driving software and robotics.
In a post on X following publication of this story, Musk wrote, “Tesla had no place to send the Nvidia chips to turn them on, so they would have just sat in the warehouse.” He said the “south extension” of the Texas Gigafactory will soon “house 50k H100s” for training of self-driving technology.
Musk later added that, of Tesla’s $10 billion in “AI-related expenditures” this year, $3 billion to $4 billion will go to purchasing Nvidia hardware.
/cdn.vox-cdn.com/uploads/chorus_asset/file/25355897/STK022_ELON_MUSK_CVIRGINIA_D.jpg)
:format(webp)/cdn.vox-cdn.com/uploads/chorus_asset/file/25355897/STK022_ELON_MUSK_CVIRGINIA_D.jpg "Photo collage of Elon Musk.")
