Elon Musk Praises 'Best AI Chip' as Nvidia Rallies for Fifth Consecutive Day

According to MarketWatch, Nvidia (NVDA-US) shares climbed on Wednesday (5th), rising for the fifth consecutive trading day even as the broader chip sector weakened.

The surge was significantly driven by SpaceX CEO Elon Musk's strong endorsement of Nvidia's AI chips during the company's first-ever earnings call.

Musk praised Nvidia's upcoming Vera Rubin chip architecture as the 'best' and revealed that SpaceX 'has decided to fully adopt Nvidia products.'

'We believe it is the best AI computer, and we highly value our close partnership with Nvidia on multiple levels,' he said.

Later in the call, Musk added that SpaceX has reached an agreement with Nvidia to 'acquire a significant portion of its GPUs next year.' Nvidia currently dominates the GPU market, with AMD (AMD-US) as its main competitor.

Nvidia's stock rose 3.4% on Wednesday, marking its fifth consecutive day of gains, with a cumulative increase of 15.4% over the period.

SpaceX's Compute Expansion Could Be a Major Growth Driver for Nvidia

Musk stated that SpaceX plans to deploy over 2GW of AI computing power by the end of this year and aims to scale up to nearly 10GW by the end of 2027.

Chris Caso, an analyst at Wolfe Research, noted that if Nvidia generates approximately $35 billion in revenue per 1GW of newly deployed chips, SpaceX alone could contribute more than Wall Street's current estimate of $160 billion in additional data center revenue growth for Nvidia by 2027.

Caso wrote in a report, 'At a time when the market is questioning the sustainability of AI spending, Musk's comments provide some evidence that the momentum for AI spending may continue.'

He also pointed out that Nvidia's partnerships with OpenAI, Anthropic, and other cloud service providers suggest that 'current market estimates appear very conservative.'

Musk said the new AI computing capacity at SpaceX will be used to develop the Grok chatbot and AI software tools, and will also support the company's acquisition of the AI programming platform Cursor.

He also revealed that SpaceX's upcoming Starmind AI satellite 'will essentially be a modified Vera Rubin NVL72 computer,' expected to launch next year. The Vera Rubin NVL72 is a rack-scale system composed of 72 Rubin GPUs and 36 Vera CPUs.