As if promoting a democratic process to drive business decisions, Tesla (TSLA) CEO Elon Musk asked his followers on the X platform a critical question. He asked if the firm should invest $5 billion into his artificial intelligence startup, xAI.
Users voted in favor of the investment, so CEO Musk will decide on the board. When the decision likely passes, it would value xAI at $24 billion.
xAI is reportedly already scraping personal content posted on X.
xAI adds to the pile of AIs traded on large language models. Meta Platforms (META) has Llama, Alphabet (GOOG) has Gemini, and Microsoft has ChatGPT. The AI market is growing increasingly crowded. Unique information is growing scarce. This suggests that xAI is a good financial investment should its valuation expand. The business of AI, however, is questionable.
Tesla Loses Focus
Tesla’s investment in AI steers the firm away from its core competency. Unless the firm applies xAI to self-driving solutions, it adds value to the core business. Electric vehicle sales are falling sharply. Governments around the world are offering fewer tax credit incentives. This increases the overall cost of an EV. Consumers are unwilling to buy expensive items amid inflation and lower disposable income.
TSLA stock earns a hold rating from here.
