Tesla (TSLA) Stock Climbs as Musk Unveils Secret Weapon: AI Chip Business

TLDR

• Tesla CEO Elon Musk revealed the company has operated an advanced AI chip design team for years, with millions of chips deployed in cars and data centers
• Tesla stock rose 1.5% in premarket trading to $397.19 following Musk’s announcement and broader market gains
• The company is completing its AI5 chip design and plans annual chip releases, though volume production won’t start until 2027
• Musk stated Tesla aims to eventually manufacture more AI chips than all other chipmakers combined
• Piper Sandler maintains an Overweight rating with a $500 price target, citing progress in AI and Full Self-Driving technology

Tesla stock gained ground in premarket trading after CEO Elon Musk disclosed details about the company’s chip design operations. Shares rose 1.5% to $397.19 on Monday morning.

Tesla, Inc., TSLA

Musk took to social media Sunday to highlight Tesla’s AI chip engineering team. The group has been operating for several years, though largely out of public view.

These chips power Tesla’s real-world AI capabilities. They enable the company’s autonomous driving features and train the systems that guide its vehicles.

The revelation comes as Tesla stock has struggled in November. Shares have dropped more than 14% this month. Year to date, the stock is down about 3%.

Chip Development Timeline and Production Plans

Tesla is nearing completion of its AI5 chip design. The company has already begun work on AI6. Musk outlined a plan for annual chip releases going forward.

Volume production of AI5 won’t begin until 2027 through TSMC. Low-volume production may start in 2026. The timeline represents a delay from earlier internal projections.

Musk stated Tesla eventually expects to manufacture more AI chips than all other chipmakers combined. The claim reflects the company’s long-term ambitions in the AI hardware space.

The company currently uses AI4 chips in vehicles. AI5 will represent another step forward in processing power and efficiency.

Tesla’s chip business supports its autonomous driving technology. The company operates data centers that train neural networks using real-world driving data from its fleet.

Market Valuation and Analyst Views

Tesla trades at 177 times estimated 2026 earnings. The company’s $1.3 trillion market value reflects investor optimism about its AI potential.

The stock currently trades between $380 and $420. Technical indicators show the price consolidating after recent volatility.

Piper Sandler reaffirmed its Overweight rating with a $500 price target. The firm visited Tesla’s Fremont plant and noted progress in AI, robotics, and Full Self-Driving version 14.

The analyst team highlighted Tesla’s autonomy efforts as a key differentiator. A flawless FSD demonstration during the plant visit strengthened the firm’s bullish stance.

Musk used the announcement to recruit additional talent. He encouraged engineers to email AI_Chips@Tesla.com with evidence of exceptional ability.

Tesla’s chip expertise relates directly to its plans for self-driving cars and humanoid robots. The Optimus robot program relies on similar AI processing capabilities.

The stock faces near-term headwinds from its automotive business. Delivery numbers and margin performance remain key drivers of short-term price movement.

As of November 24, Tesla stock closed at $393.84, down 0.3% for the day. The price action reflects ongoing investor uncertainty about near-term catalysts.

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