Key Takeaways
- Tesla CEO Elon Musk said he expects the company to spend between $3 billion and $4 billion on Nvidia hardware for artificial intelligence (AI) initiatives in 2024.
- Nvidia has emerged as a major beneficiary of the AI era, with the chipmaker’s stock more than doubling year-to-date.
- Bank of America analysts projected Nvidia could capture more than 75% of the $90 billion AI accelerator market in 2024.
- Musk’s comments came in response to a CNBC report that he reallocated Nvidia chips reserved for Tesla to his companies X and xAI.
Tesla (TSLA) Chief Executive Officer (CEO) Elon Musk indicated he expects the electric vehicle (EV) pioneer to spend between $3 billion and $4 billion on Nvidia (NVDA) hardware for artificial intelligence (AI) training in 2024.
Musk said on X, another one of his companies, that his “current best guess for Nvidia purchases by Tesla are $3B to $4B this year.”
He noted, “Of the roughly $10B in AI-related expenditures I said Tesla would make this year, about half is internal, primarily the Tesla-designed AI inference computer and sensors present in all of our cars, plus Dojo,” Tesla’s supercomputer system. Musk said that for “building the AI training superclusters,” Nvidia hardware accounts for around two-thirds of the cost.
Underscoring Nvidia’s AI Dominance
Tesla’s Nvidia spending highlights the chipmaker’s prime position amid the AI boom. Nvidia has emerged as a major beneficiary of the AI era, with the its stock more than doubling since the start of 2024 after tripling in 2023. The company has become the third-largest U.S. company by market capitalization, behind Microsoft (MSFT) and Apple (AAPL).
Bank of America analysts projected Nvidia could capture more than 75% of the $90 billion AI accelerator market. In comparison, the analysts expect that the rest of the market could be spread among others like Advanced Micro Devices (AMD) and Intel (INTC), as well as in-house custom chips by companies like Alphabet’s Google (GOOGL), Microsoft, Amazon (AMZN), and Meta Platforms (META).
Nvidia recently unveiled its next-generation AI system, Rubin, coming in 2026, succeeding the upcoming Blackwell system, which analysts have called the “most ambitious project in Silicon Valley.” Analysts believe the yet-to-be-released Blackwell platform is already sold out into 2025.
Musk Reportedly Rerouted Tesla’s Nvidia Chips to His Other Companies
Musk reportedly told Nvidia to ship AI chips reserved for the EV maker to his companies X and xAI, according to CNBC.
The CEO seemingly confirmed that he did reallocate Nvidia hardware meant for Tesla, saying in an X post replying to the CNBC article, “Tesla had no place to send the Nvidia chips to turn them on, so they would have just sat in a warehouse.”
The news may support some concerns that Musk cannot prioritize Tesla as he is CEO of several companies other than the EV maker, including xAI and SpaceX, and that he is running the separate companies as one entity sharing resources.
The reallocation is especially significant given the demand for Nvidia chips has outpaced supply, leading the company to carefully select which customers are first to receive its AI chips.
Tesla shares were down 1.2% to $172.70 as of 10:08 a.m. ET Wednesday, while Nvidia shares rose 2.3% to $1,191.50.