Musk Bets Big on Chips—Tesla and xAI Stick With Nvidia and AMD

​Elon Musk is doubling down on his AI vision, revealing plans for both Tesla and xAI to keep buying massive quantities of chips from Nvidia and AMD. In an interview with CNBC, Musk said his artificial intelligence firm xAI has already installed 200,000 GPUs at its Memphis-based Colossus facility, which he claimed is now the most powerful AI training cluster on the planet.

And that’s just the beginning.

Musk unveiled xAI’s ambition to build a 1 million GPU facility outside Memphis, underscoring how crucial chip supply remains to the future of AI. He called his earlier prediction—that chips would be the main bottleneck for AI—“obvious,” and said he now sees electrical infrastructure as the next limiting factor, forecasting an electricity shortage by mid-2026.

Tesla and xAI aren’t just strategic partners—they’re already intertwined. xAI spent nearly $228 million on Tesla’s utility-grade Megapacks through early 2025, integrating energy storage with AI compute.

But not everyone is celebrating. Environmental groups have criticized xAI’s use of natural gas-burning turbines to power its supercomputers, saying the operation likely violates the Clean Air Act. Locals have raised concerns about air pollution and regulatory oversight.

Despite the backlash, Musk remains focused on scale and speed. While denying plans to merge Tesla and xAI, he didn’t rule it out entirely, saying such a move would require Tesla shareholder approval.

For now, the strategy is clear: build the biggest, fastest AI infrastructure possible—powered by Nvidia and AMD. Musk is betting that chip dominance today will translate into AI dominance tomorrow.







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