SA Asks: Should Tesla invest in Grok chatbot developer xAI?

Recently, Tesla CEO Elon Musk said he thought Tesla (NASDAQ:TSLA) shareholders should have a chance to vote on whether the EV maker should invest in his AI company, xAI, which is best known for its chatbot Grok.

We asked Seeking Alpha analyst Livy Investment Research if they thought Tesla (NASDAQ:TSLA) should invest in xAI, which also owns the social media platform X.

Livy Investment Research: Tesla’s (TSLA) potential investment in xAI could introduce near-term volatility as markets weigh and digest the possible pros and cons of such a tie-up. But on a net basis, a partial stake, rather than a tuck-in acquisition, could be a newfound positive for Tesla.

While recent backlash over Grok’s antisemitic behavior risks deepening Tesla’s (TSLA) exposure to political rifts, xAI’s swift acknowledgement of fault and commitment to fixing the issue helps contain the short-term headwind. This keeps longer-term upsides of the potential investment intact by improving Tesla’s (TSLA) exposure to agentic AI capabilities, which could unlock synergies with its ongoing Robotaxi and Optimus developments.

A partial investment in xAI could also yield immediate fundamental relief for Tesla (TSLA) by furthering Grok integration across Tesla vehicles and deepening its services revenue exposure via Connectivity or new-tier Grok subscriptions to offset slowing auto sales. The move may also help consolidate Musk’s focus on Tesla (TSLA) operations by aligning his AI ambitions more closely with the company, which addresses a key investor concern.