- Musk said he is a "huge admirer" of Nvidia and CEO Jensen Huang and called the company’s valuation well deserved.
- He added that Tesla’s upcoming AI5 chip is designed mainly for edge computing in Optimus and robotaxi.
- Musk said a future AI6 chip could match dual AI5 performance on the same process node, signaling continued in-house chip progress.
Tesla CEO Elon Musk said SpaceX and the EV maker will continue ordering Nvidia chips at scale, underscoring the chipmaker’s central role in his AI ambitions even as in-house chip development advances.
TSLA stock snapped two straight sessions of gains on Wednesday to end nearly 2% lower at $392.78. However, shares gained slightly in extended trading.
Nvidia Remains Core To Tesla’s AI Strategy
Musk said on X that Tesla and SpaceX “expect to continue ordering Nvidia chips at scale,” adding that he is a “huge admirer of Nvidia and Jensen” and that the company’s valuation is “well-deserved.”
Nvidia’s valuation has moderated in recent months. The forward 12-month price-to-earnings ratio stood at 21.8 as of Wednesday, down from 27.4 in January and 36.1 in October.
Alongside continued reliance on Nvidia, Musk outlined Tesla’s in-house chip roadmap, saying its upcoming AI5 processor “will punch far above its weight,” driven by tight integration between software and hardware.
“Bear in mind that AI5, while it can be used for training in data centers, is primarily optimized for AI edge compute in Optimus and Robotaxi. There is still significant room for improvement. In the same half reticle and same process node, we think a single AI6 chip has the potential to match a dual SoC AI5,” Musk said.
His comments came in response to a post by Phil Beisel, a senior director at Rivian and former Apple executive, who said Tesla’s forthcoming AI5 chip uses a half-reticle design that is “crucial for yield,” noting that fitting two chips per shot can effectively double output.
Nvidia Powers xAI’s $20B AI Expansion
Musk’s latest remarks come after a series of developments that have reinforced Nvidia’s role at the center of his AI ecosystem. In January, xAI completed an upsized Series E funding round, raising $20 billion, exceeding its initial $15 billion target, with Nvidia participating as an investor alongside other financial backers.
The funding is aimed at scaling compute infrastructure built largely on Nvidia hardware, with xAI expanding data centers such as Colossus I and II and deploying GPU clusters totaling over one million H100 equivalents. The company said the capital will support further infrastructure buildout and development of future models, including Grok 5.
Nvidia CEO Jensen Huang said he was “delighted” to invest in xAI and added that he “didn’t give him more money,” underscoring the chipmaker’s role in accelerating AI deployment across customers.
Tesla Terafab Plan Targets Chip Supply Bottleneck
Over the weekend, Musk said Tesla’s “Terafab Project launches in 7 days,” pointing to plans for a large-scale semiconductor manufacturing facility.
Tesla first outlined the need for such capacity during its January earnings call, warning that AI compute and memory supply could become a bottleneck within three to four years as demand rises sharply.
The company is targeting massive chip volumes to support its robotaxi and humanoid robot ambitions, with Morgan Stanley estimating Tesla could require over 200 million chips annually if its Optimus robot production scales as planned.
Musk Says SpaceX Could Lead AI Race
Earlier this week, Musk said SpaceX could “far exceed everyone combined” in AI, as the rocket maker deepens its integration with xAI following a merger that values the combined entity at more than $1 trillion.
The deal brings together SpaceX’s satellite infrastructure and xAI’s AI models, while Tesla has received regulatory clearance to convert a previously announced $2 billion investment in xAI into a stake in SpaceX. Musk has also pointed to space-based energy as a potential solution to the growing electricity demands of AI systems, citing limitations in terrestrial infrastructure.
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