Elon Musk ordered Nvidia to redirect thousands of AI chips originally reserved for Tesla to X and xAI instead.

Elon Musk claims he can grow Tesla into "a leader in AI & robotics," an ambition that he has said will require substantial investment in expensive processors from Nvidia. On Tesla's first-quarter earnings call in April, Musk said the electric vehicle company will increase the number of active H100s — Nvidia's flagship artificial intelligence chip — from 35,000 to 85,000 by the end of this year. He also wrote in a post on X a few days later that Tesla would spend $10 billion this year "in combined training and inference AI."

However, emails written by Nvidia senior staff and widely shared inside the company suggest that Musk presented an exaggerated picture of Tesla's procurement to shareholders. Correspondence from Nvidia staffers indicates that Musk diverted a sizable shipment of AI processors that had been reserved for Tesla to his social media company X, formerly known as Twitter. By ordering Nvidia to let privately held X jump the line ahead of Tesla, Musk pushed back the automaker's receipt of more than $500 million in graphics processing units, or GPUs, by months. An Nvidia memo from December stated: "Elon prioritizing X H100 GPU cluster deployment at X versus Tesla by redirecting 12k of shipped H100 GPUs originally slated for Tesla to X instead. In exchange, original X orders of 12k H100 slated for Jan and June to be redirected to Tesla." A more recent Nvidia email, from late April, said Musk's comment on the first-quarter Tesla call "conflicts with bookings" and that his April post on X about $10 billion in AI spending also "conflicts with bookings and FY 2025 forecasts."

Musk's division of focus among his companies has become a point of contention with Tesla shareholders. Beyond his role as Tesla's CEO, Musk serves as CEO of aerospace company SpaceX, founder of brain-computer interface startup Neuralink and tunneling venture The Boring Co., and owner of X, which he acquired for $44 billion in late 2022, when it was still called Twitter. He also launched his AI startup, xAI, in 2023, with X and xAI tightly intertwined — Musk wrote in a November post on X that "X Corp investors will own 25% of xAI," and xAI uses capacity in X data centers for training and inference for the large language models behind its chatbot, Grok, which Musk has pitched as a politically incorrect chatbot with "a rebellious streak" and originally named Truth GPT. Meanwhile, Tesla faces significant challenges, with a troubling sales decline due in part to its aging lineup of electric vehicles and increased competition, and its reputation has suffered in the U.S., with the Axios Harris Poll 100 survey attributing some slippage to Musk's "antics" and "political rants." Tesla's stock price is down 29% this year.

Nvidia's GPUs are in limited supply due to soaring demand from Google, Amazon, Meta, Microsoft, OpenAI and others. Nvidia, now the third-most-valuable company in the world with a $2.8 trillion market cap, has reported its third straight quarter of more than 200% revenue growth. CEO Jensen Huang stated on an earnings call in May that customers "are consuming every GPU that's out there," and on an earnings call in February, he said Nvidia does its best to "allocate fairly and to avoid allocating unnecessarily." On the May call, when naming customers already using Nvidia's next-generation Blackwell platform, Huang mentioned xAI alongside six of the biggest tech companies on the planet as well as Tesla.

Rather than discussing current EV sales or the massive restructuring underway at Tesla, Musk has been encouraging investors to focus on future products he has promised for years but has yet to deliver, including AI software to turn existing cars into self-driving vehicles, dedicated robotaxis that can make money for their owners, and a driverless transportation network. "If somebody doesn't believe Tesla's going to solve autonomy, I think they should not be an investor in the company," Musk said on the April earnings call. "We will, and we are." To support his vision, 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, with the technology potentially helping Tesla develop the computer vision and LLMs needed for humanoid robots and autonomous vehicles.