Tesla (TSLA) shot up on Monday after Elon Musk highlighted over the weekend that the company is in the business of AI chip design.
“Most people don’t know that Tesla has had an advanced AI chip and board engineering team for many years,” Musk updated on social media site X. “That team has already designed and deployed several million AI chips in our cars and data centers. These chips are what enable Tesla to be the leader in real-world AI,” he noted.
Tesla is close to finishing its AI5 chip, has started work on its AI6 chip, and is aiming to bring a new chip design to volume production every 12 months, Musk added.
Looking back, Tesla (TSLA) started its custom AI chip journey with its AI3/HW3 hardware platform in 2019, followed by AI4 in 2023. Each generation has substantially improved compute performance and memory capacity to support advancements in full self-driving capabilities. The AI5 chip is expected to have design completion expected in 2026 and volume production forecasted for 2027. The AI6 chip is expected to enter production in 2028 as a key enabler of full self-driving, robotics, and data center workloads. The AI6 chip will feature a unified architecture that tightly integrates training and inference capabilities, as well as significantly greater computational power.
“These chips will profoundly change the world in positive ways, saving millions of lives due to safer driving and providing advanced medical care to all people via Optimus,” highlighted Musk.
Tesla (TSLA) also received a sell-side boost on Monday when Melius reiterated its bullish stance, calling the stock a “must own” as the world is on the verge of a dramatic shift towards autonomy and AI adoption in transportation. Analyst Rob Wertheimer and his team think that Tesla’s (TSLA) lead in areas such as chips, vertical integration, and software design continues to widen, making legacy automakers unable to catch up due to outdated architectures.
Shares of Tesla (TSLA) were up 6.5% at 10:48 a.m. and traded as high as $417.34 earlier in the session.