Elon Musk vs. Sam Altman: The AI Race Heats Up with Major Developments

Currently, tech fans and market analysts are viewing Elon Musk and Sam Altman as competitors.

From Partners to Rivals: The Origins of OpenAI

However, their relationship was quite different in the past.

They began OpenAI together in 2015, united by a common goal of advancing artificial intelligence.

By 2018, it became apparent that they had diverging visions for the future of the organization, leading Musk to depart from OpenAI.

Fast forward to 2022, when the launch of ChatGPT-4 ignited a major surge in AI development.

In response, Musk created his own AI venture in 2023 named xAI, aiming to regain his footing in this rapidly evolving field.

A Bold Move: Expansion of Colossus

One key initiative has been Colossus, touted as the world’s largest supercomputer. Based in Memphis, Tennessee, it boasts 100,000 graphics processing units (GPUs) and was built in just 122 days—an impressively quick timeframe for such a massive project.

Recently, on December 4, an exciting announcement emerged: xAI will expand Colossus to accommodate at least 1 million GPUs. These GPUs are critical for training xAI’s chatbot, Grok, which was the startup’s first major product.

To facilitate this growth, two major players in the AI sector are involved: NVIDIA Corporation (NVDA) and Super Micro Computer, Inc. (SMCI). NVIDIA supplies the necessary GPUs, while Super Micro and Dell Technologies Inc. (DELL) have set up the supercomputer’s server racks. These companies will also establish operations in Memphis to support the expansion.

The Impact on NVIDIA and Super Micro

With the recent developments, NVIDIA and Super Micro have been in the spotlight on Wall Street as they face mounting challenges. Today in Market 360, I will discuss what this means for the AI landscape and briefly touch on the recent downturn for these companies.

Concerns Surrounding NVIDIA

Recently, NVIDIA’s stock faced a decline, dropping 5% earlier this week and now down around 5.7% for the week overall.

This drop is attributed to China opening an investigation into the company for alleged monopolistic practices.

In my view, this accusation, while serious, speaks to why I hold NVIDIA stock; its market dominance is substantial with little competition.

China’s frustration primarily stems from U.S. restrictions on certain chip sales, leading to additional modifications from NVIDIA to comply with regulations. Such restrictions have further strained relations.

Despite these challenges, NVIDIA’s key fundamentals remain intact. The stock’s recent movement primarily resulted from reactionary trading following negative news.

Positive Developments for Super Micro

Super Micro Computer faced scrutiny earlier this year when Hindenburg Research raised issues of potential accounting irregularities linked to a former employee’s claims.

However, a subsequent independent review revealed no evidence of wrongdoing, causing a significant 30% spike in their stock price.

On December 6, the NASDAQ granted Super Micro an extension for their 10-K and 10-Q filings, allowing until February 25, 2025, to meet reporting requirements. This news pushed their stock up by another 7%.

CEO Charles Liang expressed confidence in meeting the upcoming deadlines, even though investor profit-taking saw the stock drop approximately 10% this week.

It’s important to note that Super Micro continues to excel in providing liquid-cooled AI solutions, which are in high demand. Recently, they reported shipping a record 100,000 GPUs in just the last quarter, showcasing their strong position in the market.

Stock Picking in a Booming Market

Clearly, the momentum behind the AI Boom shows no signs of slowing. xAI’s initiative to expand Colossus emphasizes the fierce competition among AI developers, including both xAI and OpenAI, as well as numerous well-funded startups and major tech companies.

This ongoing competition bodes well for companies like NVIDIA and Super Micro, whose technologies are integral to AI development.

Investors shouldn’t be overly concerned about fluctuations in these stocks. Stable fundamentals will prevail.

For those seeking investment opportunities like NVIDIA and Super Micro, I’m excited to share my proprietary tool, Stock Grader, which helps identify strong stock candidates.

I have extensive experience in the industry, but the performance of my colleague Luke Lango’s tool, called Auspex, is impressive. Backtested results show that it returned an astounding 1,054% compared to the S&P 500’s 109% over the same period from 2019 to 2024.

This week, Luke presented details on how Auspex operates during an event called The Auspex Anomaly Event, which is only available to view for a limited time.

Click here to watch the replay of The Auspex Anomaly Event.

Sincerely,