Tesla to invest one billion dollars in Dojo supercomputer training, will it open another AI battleground?

Tesla released its Q2 2023 financial report, maintaining its Bitcoin holdings at 10,800 coins with a book value of $184 million. Despite a series of price cuts by Tesla leading to a decrease in the operating margin to 9.6%, CEO Musk stated that sacrificing profit for sales volume is "reasonable." Musk also announced a $1 billion investment in the supercomputer Dojo next year, potentially opening up a different AI battleground.

Tesla Sacrifices Profit for Sales Volume

Due to Tesla's consecutive price cuts, the operating margin has dropped to 9.6%, marking the third consecutive quarter decline and the lowest in five quarters. However, shareholders are more concerned about the EPS, which has increased to $0.78.

Elon Musk seems unfazed and mentioned during a conference call that sacrificing profit for sales volume is "reasonable." If the economic environment worsens, Tesla will further reduce prices. The recent price reduction strategy has led Tesla to achieve record-high revenue, production, and delivery numbers in the second quarter.

10,800 Bitcoins with a Book Value of $184 Million

After purchasing 48,000 Bitcoins in 2021, Tesla sold 4,800 and 32,400 Bitcoins in the first quarter of 2021 and the second quarter of 2022, respectively. The official explanation was to hold more cash to deal with future market uncertainties. The latest financial report shows that Tesla still holds 10,800 Bitcoins with a book value of $184 million, unchanged for four consecutive quarters.

$1 Billion Investment in Supercomputer Dojo Next Year

The Tesla financial report indicated that solving vehicle autonomy on a large scale requires four main technological pillars—massive real-world datasets, neural network training, vehicle hardware, and vehicle software. Tesla is developing each pillar internally. In July, Tesla began producing the Dojo supercomputer, taking a step towards faster and cheaper neural network training. According to its internal estimates, its computing power is expected to rank among the top five globally by 2024.

CEO Elon Musk mentioned during a conference call:

Next year, we will invest $1 billion in Dojo.

This significant expenditure plan surprised investors, but Tesla CFO Zachary Kirkhorn quickly clarified during the meeting that this investment is divided into R&D and capital expenditures, aligning with the previously stated three-year spending outlook.

Is Tesla an Undervalued AI Stock?

Taiwanese renowned financial podcast host Gu Ai has repeatedly mentioned in the program that Tesla is an undervalued AI stock. Its autonomous driving technology already incorporates many AI computing techniques, and Musk can integrate Tesla, Twitter, SpaceX, and even its newly established xAI, using a vast amount of information as AI training data. Gu Ai estimates that its computing power may be focused on Tesla.

Yesterday, Tesla's stock price TSLA fell by 4.19% after hours to $279.07. However, it has risen by 145% year-to-date.