TLDR
- Tesla CEO Elon Musk revealed the company operates a long-standing AI chip design team with millions of chips deployed
- Tesla stock gained 1.5% in premarket trading to $397.19 following the disclosure
- The AI5 chip is nearing completion with full production planned for 2027 through TSMC
- Musk says Tesla aims to manufacture more AI chips than all competitors combined
- Shares trade at $1.3 trillion valuation despite 14% November decline
Tesla stock moved higher in premarket trading Monday after Elon Musk shared details about the company’s chip engineering operations. Shares rose 1.5% to $397.19.
Musk used social media Sunday to inform investors about Tesla’s AI chip capabilities. The company has maintained a chip design team for multiple years without widespread public awareness.
The team has created and deployed several million AI chips. These processors operate in Tesla vehicles and data centers across the company’s network.
Tesla’s chips enable the autonomous driving systems in its cars. They also power data centers that train machine learning models using real-world driving information.
The stock has faced pressure in recent weeks. Shares dropped 14% through November and sit down roughly 3% for 2025. Tesla maintains a $1.3 trillion market valuation.
Chip Development Roadmap and Manufacturing Scale
Tesla is completing its AI5 chip design while starting development on AI6. The company plans to introduce new chip architectures every 12 months.
Full-scale AI5 production is scheduled for 2027. Tesla will partner with TSMC for manufacturing. Limited production runs may begin in 2026.
Musk stated Tesla expects to surpass all other chipmakers in total production volume. The projection reflects the company’s expansion plans in AI hardware.
Current Tesla vehicles use AI4 chips. The newer designs will deliver increased processing power for autonomous systems and robotics applications.
Tesla operates computing facilities that process data from millions of vehicles. This infrastructure supports continuous improvement of self-driving technology.
Valuation Metrics and Market Position
Tesla trades at 177 times estimated 2026 earnings. The premium valuation stems from investor expectations around AI and autonomous vehicle technology.
Piper Sandler holds an Overweight rating with a $500 price target. Analysts visited Tesla’s Fremont plant and noted progress in AI development and Full Self-Driving version 14.
The firm’s analysts observed a demonstration of FSD technology during their visit. They consider Tesla’s autonomous capabilities a key differentiator from traditional automakers.
Tesla stock trades in a range between $380 and $420. The price closed at $393.84 on November 24, slipping 0.3%.
Support levels appear around $380 based on recent trading patterns. Resistance sits near $405 to $415 where selling pressure has emerged.
Musk announced a recruitment drive for chip engineers. He asked candidates to email AI_Chips@Tesla.com with proof of technical expertise.
The chip business supports Tesla’s broader AI strategy. The company plans to use similar technology in its Optimus humanoid robot program.
Tesla’s chip capabilities differentiate it from conventional automakers. Investors view the company as a technology enterprise with multiple revenue streams.
Musk highlighted potential applications beyond vehicles. He mentioned autonomous driving safety improvements and medical care through robotics.
The announcement comes as AI stocks face headwinds. Tesla and other AI-focused companies have seen share prices decline in November.
Get 3 Free Stock Ebooks
Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.
- Top 10 AI Stocks - Leading AI companies
- Top 10 Crypto Stocks - Blockchain leaders
- Top 10 Tech Stocks - Tech giants
