Should Tesla Inc (NASDAQ:TSLA) invest $5 billion into OpenAI competitor xAI? That is the simple question posed by boss of both Elon Musk.
In standard Musk fashion, he raised the prospect in a user poll on Twitter/X, the social media company that he is also boss of.
Yes, appears to be the overwhelming sentiment of the 515,000-plus voters, although the potential for inherent bias in a voting pool largely comprising his X subscribers should be taken into account.
Should Tesla invest $5B into @xAI, assuming the valuation is set by several credible outside investors?
(Board approval & shareholder vote are needed, so this is just to test the waters)
— Elon Musk (@elonmusk) July 24, 2024
Any potential investment of this size will need shareholder and Tesla board approval, making the poll results non-legally binding.
But it raises a tantalising prospect for Tesla shareholders who would like exposure to the xAI segment of Musk’s sprawling business empire.
In its ambitions to become a genuine competitor to ChatGPT owner OpenAI, which Musk co-founded before exiting the company due to creative differences, xAI recently pressed the on switch on the self-proclaimed “most powerful AI training cluster in the world”.
True or not, the supercluster is certainly big- it comprises 100,000 of Nvidia Corp’s cutting-edge H100 AI graphics processing units.
A single H100 can set you back $30,000, so it’s clear Musk is not doing things by halves.
A $5 billion investment from Tesla would presumably go towards fitting out more of these superclusters to make xAI’s Grok large-language model all the more powerful.
Grok is firmly marketed as an ‘anti-woke’ alternative to ChatGPT and Google’s Gemini programme, which have been accused of overt political correctness and left-wing bias.
It hasn’t gone exactly to plan, with anti-woke flag waver Jordan Peterson called xAI “near as woke as the latter”, to which Musk replied: “Unfortunately, the Internet (on which it is trained), is overrun with woke nonsense”.
The question for the Tesla board and its shareholders is whether they want to indirectly own a stake in a product with clear social-political motivations.
Shareholders may also bristle at diverting even more attention away from what Tesla’s meant to do – sell electric vehicles – at a time when sales and profits are falling short of expectations.
Tesla shares are falling far short of the rest of its Magnificent Seven cohort. In the past 12 months, the stock has lost around $65 billion in value.
Perhaps a bit of diversification wouldn’t be a bad thing.