Tesla shareholders have filed a lawsuit against CEO Elon Musk, accusing him of diverting critical AI talent and resources away from Tesla and into his new AI-focused company, xAI. The lawsuit alleges that Musk has been poaching AI-focused employees from Tesla and redirecting critical Nvidia GPUs from Tesla to xAI. The shareholders claim that Tesla's board has failed to stop Musk's actions. Musk has previously emphasized the importance of building AI capabilities for Tesla's future growth. Tesla's stock has dropped more than 25% this year, and critics argue that Musk's alleged actions have contributed to the decline.
The lawsuit, filed just before Tesla's shareholder meeting, seeks to hold Musk accountable for diverting resources away from Tesla and to compensate shareholders for any losses incurred as a result of Musk's actions. The outcome of the lawsuit could have significant implications for Musk and the future of xAI. The plaintiffs are seeking to force Musk to relinquish his stake in xAI and transfer it to Tesla.
Musk founded xAI in 2023 and recently secured $6 billion in funding for the startup. The lawsuit claims that at least 11 employees have left Tesla to join xAI directly, further depleting Tesla's AI talent pool. The plaintiffs also allege that Musk diverted a shipment of AI processors from Nvidia, which had been reserved for Tesla, to his social media company X.
Musk's decision to start xAI has raised concerns about the potential impact on AI security. Musk has previously expressed concerns about the security risks associated with AI, and his decision to launch a competing AI company has drawn attention to the issue. While Musk dropped his lawsuit against OpenAI and Apple, his concerns about AI security persist. The controversy surrounding Musk's actions highlights the ongoing debate about the responsible development and use of AI.
Despite the legal challenges and controversy, Tesla's shareholder meeting is proceeding as planned, with shareholders set to vote on a $56 billion compensation package for Musk. The outcome of the vote will determine the level of support Musk has from Tesla's shareholders and could have implications for the company's future direction.
In a new development, Elon Musk's xAI has decided to build a system to train AI models internally instead of relying on cloud technology from Oracle. This decision has caused Oracle shares to drop by 4.8%. The companies had previously been in talks for a potential $10 billion cloud agreement, but those talks have now ended. Oracle Chairman Larry Ellison had announced a deal to provide cloud infrastructure to xAI, but the details of the contract were not disclosed. The Information had reported that Oracle and xAI were close to a deal to expand their relationship, but those talks have also come to a halt. Musk's decision to shift away from the cloud deal highlights the challenges faced by cloud providers despite available capital [9c62c1c4].
According to a report from Analytics India Magazine, Oracle and Elon Musk's AI startup xAI have ended talks on a potential $10 billion cloud computing deal. The discussions, which had been ongoing since May, centered around a multi-year agreement for Oracle to provide cloud servers to xAI for training large language models. However, xAI has decided to build its own data center in Memphis, Tennessee, using NVIDIA chips supplied by Dell and Supermicro. Musk's startup plans to purchase 100,000 NVIDIA processors to construct what he claims will be 'the most powerful AI training cluster in the world'. The news has caused Oracle's stock to drop by 3% [ee14b762].