Elon Musk said in an interview with CNBC that he expects Tesla (TSLA) and his artificial intelligence start-up company xAI to continue buying lots of microchips from semiconductor giants Nvidia (NVDA) and
Advanced Micro Devices (AMD).
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xAI, which now owns social media company X (formerly known as Twitter), has already installed 200,000 graphics processing units (GPUs) at its facility in Memphis, Tennessee. Musk says that the privately held AI start-up is also planning a one million GPU facility outside the City of Memphis.
Musk did not specify exactly how many microchips his companies plan to order, or say when xAI might buy more chips from Nvidia and AMD. However, over the past year, Musk has directed Nvidia to send a large order of GPUs to xAI first, ahead of electric vehicle maker Tesla.
Dojo Supercomputer
Musk said Tesla’s Dojo supercomputer located in Buffalo, New York also has a need for highly advanced microchips and processors, which are used for training Tesla’s autopilot feature and the company’s Optimus robotics systems.
Musk boasted in the interview that xAI’s Colossus facility in Memphis is the “most powerful training cluster in the world right now” with “over 200,000 GPUs training coherently.” The demand by Musk’s various companies for advanced microchips and processors is good news for both Nvidia and AMD, and their stocks. NVDA stock has risen 1% this year.
Is NVDA Stock a Buy?
The stock of Nvidia has a consensus Strong Buy rating among 40 Wall Street analysts. That rating is based on 34 Buy, five Hold, and one Sell recommendations assigned in the last three months. The average NVDA price target of $164.51 implies 23.05% upside from current levels.
