TLDR
- Tesla CEO Elon Musk announced the company is sidelining its Dojo supercomputer project, calling it “an evolutionary dead end”
- Major funds including David Tepper’s Appaloosa and Soros Fund Management increased their NVIDIA holdings during Q2
- Appaloosa raised its NVIDIA position from 300,000 to 1.75 million shares in the second quarter
- Tesla will likely remain dependent on external GPU providers like NVIDIA for AI infrastructure needs
- NVIDIA stock traded down 0.2% in premarket trading on Friday at $181.65
NVIDIA received a double dose of good news this week. Major institutional investors are piling into the AI chip maker while Tesla effectively handed the company a strategic victory.
The stock wavered in early Friday trading, down 0.2% at $181.65 in premarket activity. Thursday saw modest gains of 0.2% as shares remain largely range-bound ahead of earnings on August 27.
Behind the scenes, heavyweight funds are making big bets on NVIDIA’s future. David Tepper’s Appaloosa firm dramatically expanded its position during the second quarter.
The fund jumped from 300,000 shares to 1.75 million shares. That represents nearly a six-fold increase in holdings.
Soros Fund Management also joined the buying spree. The fund purchased 932,539 shares when combining puts and calls.
This brought Soros’s total NVIDIA holdings to 990,292 shares. The moves signal strong institutional confidence in the chipmaker’s prospects.
Tesla delivered even bigger news for NVIDIA investors. CEO Elon Musk announced on social media that Tesla is abandoning its Dojo supercomputer project.
Musk called the standalone platform “an evolutionary dead end.” The decision marks a major strategic shift for the electric vehicle maker.
Tesla’s AI Strategy Pivot
Tesla had spent years developing Dojo as an internal AI infrastructure solution. The goal was to vertically integrate the company’s AI architecture across robotaxis and humanoid robotics.
Musk envisioned owning the entire compute stack. This would have created a competitive moat against rivals.
Instead, Tesla will focus on chip projects called AI5 and AI6. These represent a more multifaceted approach than the specialized Dojo platform.
AI6 will handle both training workloads and neural network inference. This covers Tesla’s broader infrastructure needs without requiring a limited computing platform.
The shift means Tesla will rely on external GPU providers during the transition. NVIDIA already supplies some of Tesla’s current AI infrastructure needs.
This dependence could expand as Tesla scales its robotaxi and robotics services. The company needs powerful chips to train and run its AI models.
Market Implications for NVIDIA
Musk’s decision reinforces NVIDIA’s dominance in AI infrastructure. Even ambitious companies with deep pockets struggle to replace established chip leaders.
The move validates NVIDIA’s position as the go-to provider for AI computing needs. Tesla joins countless other companies that rely on NVIDIA’s ecosystem.
Tesla’s pivot could boost NVIDIA’s automotive business segment. While data center sales drive most revenue, automotive represents an emerging growth engine.
More automakers may reach similar conclusions about custom infrastructure. Building specialized chips proves both costly and time-intensive for most companies.
This trend could accelerate demand for NVIDIA’s automotive products. The company offers both hardware and software solutions for autonomous vehicles.
Other chip stocks showed mixed performance in premarket trading. Advanced Micro Devices remained broadly flat while Broadcom declined 0.1%.
NVIDIA shares have broken above $180 for the first time this month. The stock continues to attract investor attention ahead of quarterly earnings on August 27.
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