xAI founder and the CEO of SpaceX and Tesla, Elon Musk, says the “next big step” for the artificial intelligence company would be Nvidia Corporation’s NVDA AI chips, the Blackwell B200s. According to New Street Research analyst Pierre Ferragu, this development underscores the market dominance of the Jensen Huang-led company.
What Happened: Over the weekend, Musk responded to a user’s post on X, formerly Twitter, and suggested that investing in current technology like Nvidia’s H100s may not be wise. “Given the pace of technology improvement, it's not worth sinking 1GW of power into H100s,” he stated.
The tech mogul went on to say that his AI startup xAI’s 100,000 H100 liquid-cooled training cluster will be online in a few months and the next significant move for the company would be to invest in 300,000 B200s with CX8 networking next summer.
When Nvidia launched its next-generation AI chips earlier this year, the company said that the new Blackwell B200s are four times faster than the H100. Meanwhile, the B100 directly replaces the H100 architecture while maintaining the same TDP, and is available as an HGX offering.
Reacting to Musk’s post, Ferragu commented, “This is huge. This may be in « Elon time » but it still means the processing power between the two generations goes up at least 15x and the cost easily 5x. That's Nvidia's market…”
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Why It Matters: Nvidia’s AI infrastructure is in high demand, as evidenced by the increased capital expenditures of its major clients, including tech behemoths like Microsoft Corporation, Meta Platforms, and Alpbhabet Inc.’s Google.
Notably, Musk announced on Tesla‘s earnings call in April that the company will double its H100 GPU chips by the end of the year, further enhancing Tesla's Full Self-Driving software. Last week, it was also reported that Musk informed investors of his plan to establish a data center with 100,000 H100 GPUs for his xAI startup.
The report came after Musk’s year-old startup closed a $6 billion fundraising round, pegging its reported valuation at $24 billion.
In May, Nvidia reported adjusted earnings per share (EPS) of $6.12 on $26 billion in revenue, showing year-over-year increases of 461% and 262%, respectively. Additionally, the company announced a 10-for-1 stock split and raised its quarterly dividend by 150%.
Nvidia’s historic surge was driven by its data center business, which experienced an astonishing 427% growth in the latest quarter. Post the earnings call, Wedbush analyst Dan Ives said, “The party's just getting started.”
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