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HomeAutomobileThe AI Bubble Is Bursting, And Tesla Is Going To Get Burned

The AI Bubble Is Bursting, And Tesla Is Going To Get Burned

Tesla is a car company, no matter what Elon and his army of Long $TSLA hodlers will tell you. Artificial intelligence, or the fancy machine learning models and response generators often referred to as AI, is proving (at least in the short term) to be an expensive boondoggle aimed at replacing workers with computers. If Tesla CEO Elon Musk has his way, the car company would hinge its future, and its billions in value, on so-called artificial intelligence.

AI Bubble Bursting

This week the tech, AI, and robotics bubble has begun to burst. When major AI tech-invested companies like Amazon, Microsoft, Apple, Tesla, and Nvidia posted disappointing earnings reports this quarter and disclosed billions of dollars of investment in AI, the market responded by delivering its worst drop in recent memory.

AI is not proving to be a profitable endeavor for, uh, anyone. Companies are pouring entire quarters’ worth of earnings into these machines that burn dollars and coal in equal measure, and Wall Street is taking notice. This tech giant arms race is mutually assured destruction, and it seems like Tesla and Elon Musk are farther out over their skis than anyone else.

Tesla’s Over Leveraged On AI

Elon Musk, somehow both the world’s wealthiest and saddest little man, has committed Tesla to an AI and robotics future. The company that began as a simple electric vehicle startup revolutionized the automotive industry in ways both positive and negative. But as the rest of the automotive industry catches up to Tesla, and the U.S. automotive landscape loses significant ground to China, Musk is pivoting Tesla away from its profitable electric cars and toward Silicon Valley’s hype trend of the day.

Elon, in part, pushed Tesla investors to approve his $55 billion compensation package by threatening to withhold AI from the company. In spite of the fact that Musk has been promising Tesla “Robotaxis” since April of 2019, full autonomy for Tesla cars since 2016, in addition to humanoid helper robots since 2021, and none have materialized. For some reason, investors are still believing his increasingly absurd lies.

Tesla’s Share Value Is Built On The Promise Of AI

The current value of Tesla’s shares is $613.85 billion. That’s a far cry from the more-than-one-trillion-dollar value of a few years ago, but it is still far and away the highest-valued automobile company in the world. For a company that made $13 billion in profit across 2023, but spent $65 billion to do it. Companies with 17 percent gross profit margins just aren’t worth two-thirds of a trillion dollars — that doesn’t happen. Investors are banking on Tesla’s “future earnings” growing exponentially, and have turned TSLA into a meme stock in the process.

There’s no way for a simple electric car company to show exponential growth in the future, so it’s been billing itself as a tech company that will “solve” AI.

Elon Wants More AI

Earlier this year Elon Musk said Tesla would invest $10 billion in 2024 toward AI and machine learning. A full $4 billion of that is expected to be spent buying Nvidia hardware to increase the company’s processing power. Musk’s AI company, xAI is in financial trouble, and he’s already talking about using Tesla finances to bail it out, to the tune of $5 billion. It seems Tesla is already spending money on AI-related processors which somehow got sent to xAI instead anyway.

Tesla has morphed from its original intent at its erratic and easily manipulated CEO’s whims, intertwining itself with the world of AI. If the world of AI is collapsing, might Tesla go with it? The company’s tiny profit margins and declining market share continue to show how weakly it’s hanging on. And Tesla has been here before, barely making it through the Model 3 “production hell” era.

Is AI ever going to revolutionize anything? Man, I don’t know, but the power-sucking, worker-replacing, venture capital hog that is today’s version of AI is some fake-ass bullshit, and the industry is reaping its comeuppance. Tesla has an opportunity to avoid getting caught as collateral damage in the AI collapse, but it seems that won’t happen with madman Musk at the helm.

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