Shares of Nvidia (NASDAQ:NVDA) fell by more than 3% Wednesday after Tesla (NASDAQ:TSLA) CEO Elon Musk told investors on the company’s earnings call after the close on Tuesday that they are “going to double down on Dojo,” its supercomputer.
Dojo is a supercomputer designed by the electric vehicle giant for computer vision video processing and recognition.
While Musk said he is “incredibly impressed by NVIDIA’s execution and the capability of their hardware,” he added that he is “quite concerned about actually being able to get steady in GPUs” and when they want them.
He noted that the demand for Nvidia is so high, and it is “obviously their obligation essentially to raise the price of GPUs to where the market will bear, which is very high.”
“So we are going to double down on Dojo, and we do see a path to being competitive with NVIDIA with Dojo,” declared Musk.
Overall, he stated that Tesla has “really got to make Dojo work,” and he has full belief that they will.
Following the comments from Musk, managing director at FinYX, Roey Kosover, told Investing.com that there is a “supreme market belief in Elon Musk,” adding that it is for all the right reasons.
“He has built an extraordinary business and shareholders have benefited substantially from following him. He also has the ability to move markets both in Crypto and Tradfi,” stated Kosover. “However, some of his assertions are not always accurate,” he added, noting that in 2016, Musk said within two years, we would have a fully autonomous Tesla.
“So perhaps his recent claim that Tesla’s Dojo would rival Nvidia shouldn’t necessarily be taken at face value,” argues Kosover. “Firstly we are not sure he will ever want to have Dojo accept the 10,000 current applications that can interact with Nvidia, and secondly that where Nvidia is now is not where they will be in the future, if and when Dojo has the capability to do that.”
Kosover adds that most people believe Dojo is still ten years away from where Nvidia is today. He also highlights Nvidia’s “incredible record of continuing to evolve and expand.”
“With Nvidia trading at 3x its current rivals’ average, it’s easy to see why comments from Elon targeting them would affect their price, but I think those who analyse the stocks in detail may just look at this as an Nvidia buying opportunity. As to whether Ai stocks generally are now overvalued – well that’s an entirely different conversation,” Kosover concludes.
