Aerospace firm SpaceX is using xAI’s fast data center buildout as part of its IPO pitch by arguing that the AI company can bring compute power online much faster and cheaper than rivals. The company says xAI launched its first Macrohard cluster in 91 days, compared with about two years for a typical buildout, and brought its first two clusters online at $2.7 million per megawatt, versus an industry benchmark of $12.3 million per megawatt. However, this speed may come with a hidden cost, according to The Information.
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Forget margin or options. Here's how the pros trade NVDAIt is worth noting that xAI achieved this partly by retrofitting existing buildings in Memphis and using temporary power and cooling equipment instead of waiting for full permanent infrastructure. As a result, although its Memphis sites now provide about 700 megawatts of compute power for AI models, the fast approach has created problems. Indeed, temporary gas turbines, Tesla (TSLA) Megapack batteries, and more than 100 mobile chillers have reportedly caused outages, interrupted model training, and pushed uptime below the company’s internal goal of 99.9%.
As a result, Elon Musk has brought in SpaceX leaders to overhaul xAI, including Starlink executive Michael Nicolls. In an internal memo, Nicolls said that xAI’s Nvidia (NVDA) GPU efficiency was an “embarrassingly low” 11% and pushed for 50% utilization in the coming months. Meanwhile, xAI has also faced executive departures and safety incidents at its Memphis sites, which include complaints about generator-related illness symptoms. So while SpaceX is pitching xAI’s speed and lower costs as a major edge, investors will likely focus on whether those data centers can become reliable and efficient enough to support the IPO story.
What Is the Prediction for TSLA Stock?
When it comes to Elon Musk’s companies, most of them are privately held. However, retail investors can invest in his most popular company, Tesla. Turning to Wall Street, analysts have a Moderate Buy consensus rating on TSLA stock based on 13 Buys, 12 Holds, and five Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average TSLA price target of $410.21 per share implies 4.7% upside potential.
