With all the drama around OpenAI and Sam Altman over the past few weeks, there’s an artificial intelligence (AI) story you might have missed.
I’m talking about Grok, Elon Musk’s new AI model. It launched just weeks ago, and it’s part of Musk’s new xAI venture.
The name “Grok” is a nod to Robert A. Heinlein’s sci-fi classic, Stranger in a Strange Land. This gem from the book might as well be Grok’s mantra:
Learning doesn’t mean just gathering knowledge… It means learning how to do things.
In other words, Grok was named after Heinlein’s concept of understanding something in its entirety and intuitively.
But there’s more to it than that. Musk designed the AI with “a bit of wit,” “a rebellious streak,” and to tackle the “spicy questions” that other AIs might avoid.
We didn’t have to wait long to get a taste of that…
In the lead-up to the release, Musk posted a conversation with Grok on X (formerly Twitter). Musk asked Grok to tell him how to make cocaine, step-by-step.
“Oh sure!” Grok responded. “Just a moment while I pull up the recipe for homemade cocaine. You know, because I’m totally going to help you with that.”
The post was clearly in jest, as highlighted by the fourth step: “Start cooking and hope you don’t blow yourself up or get arrested.” Although Musk did later provide a more detailed response for “educational purposes.”
However, Musk was dead serious when he declared in another X post that “in some important respects, it is the best [AI language model] that currently exists.”
And it’s hard to argue with that. Grok already has access to a world of data from X, which could give it a major advantage over the competition.
Now, Grok is still in its early beta phase. It’s only two months into training, being trialed by a select group of users.
But this trial period is laying the groundwork for its broader release soon. That’s why this story is worth watching now.
Musk’s Calculated Blaze in the AI Race
Musk shared that Grok will be accessible at $16 a month, a move aimed at shaking up the AI space competition.
But anyone who’s followed Elon Musk – the brain behind tech giants like PayPal, Tesla, and SpaceX – will tell you that the $16 charge for Grok is likely not his main motivation.
So what exactly is driving Elon Musk’s involvement with AI?
No doubt, his reasons are multilayered. But above all, he seems most eager to enter the race for Artificial General Intelligence (AGI).
AGI means a machine can pretty much do what we can do, and maybe even do it better. It can learn and think like a human.
The idea is that it will be able to do things we didn’t even know needed doing. As Musk once put it: “We’re headed toward a situation where AI is vastly smarter than humans, and I think that time frame is less than five years from now.”
As Inside Wall Street editor Nomi Prins put it, AI is the future. That’s why she’s been pounding the table on it for some time now. She even wrote about AI’s acceleration in her last book, Permanent Distortion, which came out last October.
Now, Musk said this back in 2020, which means he thinks we’re just a couple of years away from creating AGI.
But he’s also been clear multiple times in the past that he’s not too thrilled about who’s leading the race in AGI development.
Right now, the two main contenders in this race are OpenAI (the team behind ChatGPT) and Google (the minds behind Bard). Musk is not very fond of either of these companies.
For instance, he didn’t hold back in criticizing Google’s CEO, Larry Page, for what he saw as a lack of concern regarding AI safety.
He also had strong words for OpenAI. He characterized the company as closed and dishonest, and giving too much power to Microsoft.
Now, this adds an intriguing layer to the story, as Musk was one of the co-founders of OpenAI back in 2015. He left a few years ago due to disagreements with the other partners.
But here’s the crux…
Whether you’re a Musk fan or not, if there’s one person who can rival OpenAI and Google in AI, it’s likely him.
Besides being the world’s richest man and a modern-day Thomas Edison with his groundbreaking companies, Musk is no stranger to AI.
In fact, very few people in the world have more real-life AI experience than Musk.
In 2011, he became an early investor in DeepMind, an AI company later acquired by Google. And remember, in 2015, Musk co-founded OpenAI.
But Musk’s expertise in AI extends way beyond that.
Think about Tesla. Musk essentially built a brain that can drive a car, an incredibly complex feat. If you don’t think that alone gives him a significant edge over his rivals, I don’t know what would.
The Tesla Connection
Here’s the intriguing part – especially if you’re a Tesla shareholder.
Musk wants to develop AGI outside of Tesla. That’s why he started xAI in March, with a team stacked with former employees of OpenAI, DeepMind, and more.
It adds up. Musk currently holds less than 20% of Tesla, with institutions having a major say in voting power.
If Tesla were to make strides in AGI development, it would be Tesla, not Musk, that holds the reins of AGI. Both in language learning models and real-world AI.
By pursuing AGI development outside of Tesla – in a separate entity, a new company – Musk stands to reap all the benefits and few drawbacks.
This doesn’t mean I don’t expect Tesla shareholders to profit from xAI’s progress, too.
Just recently, in a series of posts on X, Elon Musk revealed that discussions about a partnership between xAI and Tesla are underway with the Tesla board.
If I were to speculate on what will happen…
I’d wager that Musk is considering making a proposal for Tesla to invest in xAI as a minority equity stakeholder.
That way Tesla would receive priority access to xAI’s large language models and eventually AGI. In return, xAI would receive cash and priority access to Dojo.
Dojo is a supercomputer that Tesla put together for things like computer vision, video processing, and recognition. Tesla wants to use it to improve its full self-driving and driver-assistance system and to train its machine-learning models.
This creates many opportunities for Tesla and xAI to work together, benefiting the automaker’s products and services.
For example, Tesla could integrate xAI’s AI into its vehicles to chat with passengers and guide the whole in-car passenger experience.
The upshot is that the price of Tesla shares will likely, at least in part, mirror the success and progress made by xAI.
In just a few months since its founding in March, xAI has achieved impressive milestones, including advanced AI language models and breakthroughs in natural language understanding.
What This Means for You
In sum, I think that the partnership between xAI and Tesla’s AI would be a win for Tesla shareholders.
But that doesn’t mean now is the time to go out and buy Tesla shares. The agreement between Tesla and Musk’s xAI remains uncertain, and Tesla stock is 125% year-to-date.
So it might not be the best time to invest in the automaker if you’re not already a shareholder.
Meanwhile, Elon Musk’s AI venture, xAI, isn’t publicly traded. Investing in it directly may not be an option unless you have millions to spare.
But it’s still a story worth watching. Because it could shape the future of AI and redefine the way we interact with technology.
And as an added bonus, it could lead to groundbreaking innovations within one of the world’s most cutting-edge automaking companies, paving the way for exciting advancements in the industry.
Regards,
Lau Vegys
Analyst, Inside Wall Street with Nomi Prins