Tesla (TSLA) stock is up again today, poised to finish the week higher and snap a current 8-week losing streak. News on the chipmaking front may be boosting the stock.
Tesla stock rose in early trade on Thursday, following a 7.6% jump on Wednesday. Though news flow was light on the Tesla front, some traders and analysts attributed the move to CEO Elon Musk’s claim early Wednesday that Tesla was “taping out,” or had completed the final stage of the chip design process for its upcoming AI5 chip, destined for future EVs, massive training clusters, and Optimus robots.
“I believe 80% of the [Wednesday’s stock] move is related to Elon’s nocturnal post on X announcing the tape out for Hardware 5 is complete. That’s an important update given in the world where cars are computers on wheels, a 5x improvement in chip performance helps unlock FSD and Robotaxi,” Deepwater Asset Management’s Gene Munster said yesterday.
Added Munster: “As a point of reference, AI4 started to ramp in 2023, and my best guess is AI5 comes out in the middle of next year. Elon has not commented on timing.”
The news on AI5 comes as Tesla has its own ambitious plans to fabricate its own chips at its upcoming Terafab facility. Analysts and experts claim the move to create its own “fab” is highly ambitious, and likely a massive engineering challenge.
Tesla’s new Terafab would be located in Austin, Texas. · SpaceX
AI5 has already been delayed by a couple years, so the news that it’s nearing start of production comes belatedly, though welcome by the market.
With that delay noted, on Thursday Bloomberg reported Musk is pushing suppliers to move at “light speed” to get Tesla chipmaking equipment and other needed materials to get chipmaking production going faster.
Per the report, Musk is pushing suppliers to get them answers on costs and timing in days rather than weeks, and is offering to pay more for these supplies and services to jump ahead of other clients. Suppliers contacted include Applied Materials (AMAT), Tokyo Electron (TOELY), and Lam Research (LRCX), among others.
The different kinds of chips that Terafab would theoretically produce for various uses. · SpaceX
Despite the call for light speed movement, Tesla sources tell Bloomberg the fab will begin manufacturing silicon by 2029, then scale up. And adding more to the challenge, Bernstein analysts claim the entire project would require around $5 trillion to $13 trillion in capital spending, an almost unimaginable sum.
That being said, Herculean efforts, “light speed” timing, and vast sums of capital spending are nothing new for Musk.
Investors and analysts will hear more on these plans when Tesla reports earnings on April 22nd after the bell.
Pras Subramanian is Lead Auto Reporter for Yahoo Finance. You can follow him on X and on Instagram.