Tesla (TSLA) Stock Gains as Musk Unveils Hidden AI Chip Business

TLDR

• Elon Musk disclosed Tesla has maintained an AI chip engineering team for years, deploying millions of chips in vehicles and data centers
• Shares jumped 1.5% to $397.19 in premarket trading after the announcement
• AI5 chip design is nearly complete with volume production scheduled for 2027
• Tesla plans to release new AI chip designs annually starting with AI6
• Stock has fallen 14% in November but remains valued at $1.3 trillion on AI growth prospects

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Tesla stock climbed in early Monday trading after CEO Elon Musk revealed the company’s previously low-profile AI chip business. Shares gained 1.5% to reach $397.19 in premarket action.

Tesla, Inc., TSLA

Musk announced Sunday that Tesla has operated an advanced chip engineering team for several years. The team has designed and deployed millions of AI chips across the company’s vehicle fleet and data centers.

The disclosure offers fresh insight into Tesla’s technology stack. The chips power autonomous driving features and train the neural networks that guide vehicle behavior.

Tesla stock has struggled recently despite the company’s $1.3 trillion valuation. Shares are down 14% in November and roughly 3% year to date. The stock trades at 177 times projected 2026 earnings.

Production Timeline and Manufacturing Goals

Tesla is finishing development of its AI5 chip while simultaneously beginning work on AI6. Musk outlined an aggressive schedule calling for new chip releases every 12 months.

Volume production of AI5 won’t start until 2027 through manufacturing partner TSMC. Limited production may begin in 2026. The timeline extends beyond earlier internal estimates.

Musk made a striking claim about Tesla’s manufacturing ambitions. He stated the company expects to eventually produce more AI chips than all other chipmakers combined.

Tesla currently uses AI4 chips in production vehicles. The company operates data centers that process driving data from millions of cars to improve autonomous systems.

Musk used the announcement to recruit engineering talent. He directed candidates to email [e-mail] with examples of exceptional technical ability.

Analyst Support and Price Action

Piper Sandler maintains an Overweight rating on Tesla stock with a $500 price target. The firm recently visited Tesla’s Fremont facility and observed progress in AI development and Full Self-Driving technology.

Analysts highlighted a flawless FSD demonstration as evidence of Tesla’s autonomous vehicle progress. They view the company’s AI push as a major competitive advantage.

Tesla stock currently trades in a range between $380 and $420. The price closed at $393.84 on November 24, down 0.3% for the session.

Technical indicators show neutral momentum as the stock consolidates. Support sits near $380 while resistance appears around $405 to $415.

The chip business connects directly to Tesla’s plans for robotaxis and humanoid robots. The Optimus robot program depends on similar AI processing technology.

Musk emphasized the life-saving potential of Tesla’s chip technology. He pointed to safer autonomous driving and advanced medical care through robotics as key applications.

Tesla’s AI chip expertise contributes to its premium valuation compared to traditional automakers. Investors view the company as a technology conglomerate rather than a pure car manufacturer.

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