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Tuesday, Tesla Inc. (NASDAQ:TSLA) CEO Elon Musk warned of all-out AI hardware war after investor Gavin Baker describes how Nvidia Corp.It is (NASDAQ:NVDA) new generation Black well chips could reshape the artificial intelligence (AI) economy.
The comments surfaced during the Invest Like the Best podcast, where Baker described the growing struggle between the major players in AI infrastructure.
Following the discussion, Musk took X and said: “AI is the highest ELO battle ever. The speed of deployment of hardware, particularly robotics, is [linchpin]”.
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The Elo rating system, created by Arpad Elo to measure player skill in zero-sum games such as chess, is now widely used in esports, traditional sports and even to rank large language patterns, with higher scores indicating better performance and transfer of points based on match results.
Baker said the battle centered on Alphabet Inc. (NASDAQ:GOOG) (NASDAQ:GOOGLE) Google and Nvidia, as both companies have pushed competing AI chips.
He explained that Nvidia’s Blackwell platform experienced significant delays due to the transition from Hopper The chips required radical changes in infrastructure, including higher power consumption, liquid cooling, heavier data center racks, and serious heat management issues.
“This is by far the most complex product transition we’ve ever seen in technology,” Baker said, adding that large-scale deployments of Blackwell only began in the last few months.
Baker said Google gained a short-term advantage by becoming the lowest-cost producer of AI “tokens,” allowing it to aggressively reduce prices.
They have drained “the economic oxygen from the AI ecosystem,” Baker said, describing the strategy as rational but potentially temporary.
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Baker said the first large AI models trained on Blackwell chips could arrive in early 2026 and said Musk xAI could be the first to deploy them on a large scale.
He added that more recent GB300 the systems are designed to be “directly compatible,” which could make Nvidia-powered AI systems the lowest-cost option of the future.
Baker said that once Google loses its cost advantage, it may no longer be able to run AI at significant losses, potentially reshaping competitive behavior across the industry.
Baker said that if Google was forced to change its strategy, it could face significant pressure as a higher-cost producer, warning that maintaining deeply negative margins would be painful and could begin to weigh on the company’s shares.
He added that such a change would have major implications for the broader AI economy, and said the expected launch of Rubin The chips could significantly widen the performance and cost gap compared to TPUs and other custom AI chips.
Last month it was reported that Metaplatforms, Inc. (NASDAQ:META) is in discussions to purchase Google’s tensor processing units for its data centers as early as 2026, with a wider deployment planned for 2027.
Following this, Nvidia praised Google’s progress in AI while emphasizing its own dominance, saying in a social media post that it was “excited” about Google’s advances, but always “a generation ahead” of the competition.
Photo courtesy: Shutterstock
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