Tesla (TSLA) is officially teaming up with Intel (INTC). During its earnings call on April 22, Elon Musk announced that Tesla will use Intel’s most advanced manufacturing process to build chips for its future robots and AI data centers.
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New trading tool for TSLA bearsThe news was a major win for Intel, which has been fighting to prove it can manufacture chips for outside companies. Intel shares rose about 3% in extended trading following the announcement.
What Is Terafab?
The chips will be used in Musk’s Terafab project in Austin, Texas—a large chip-making hub being built with SpaceX and partners to support Tesla’s next phase of growth.
It will produce advanced chips for Tesla’s Optimus robot and AI systems, while also supplying processors for SpaceX’s space-based data centers.
According to Musk, the facility could generate about one terawatt of computing power each year. That said, Terafab is set to be a core part of Tesla’s AI push, not just another chip facility.
Why This Deal Matters for Intel as well as Tesla
Tesla is stepping up its spending in a big way. The company plans to invest more than $25 billion this year, mainly to build out its AI systems, self-driving tech, and robotics. That includes the Terafab project, where these chips will be used.
By choosing Intel, Tesla is locking in a partner to actually make those chips. This matters because Tesla has mostly relied on outside suppliers like Samsung (SSNLF) or TSMC (TSM) until now. By switching to Intel’s 14A, Elon Musk is bringing the manufacturing home to a U.S.-based partner, which could give Tesla more control over the design and supply of key hardware.
For Intel, this is just as important. The company has been trying to grow its chip-making business for other firms, and Tesla has become one of its first major customers for advanced technology.
Which Stock Is the Better Buy Right Now?
Turning to Wall Street, both stocks carry a cautious outlook from analysts. Intel has a Hold consensus, with an average price target of $56.90, implying about 13% downside from current levels.
Also, Tesla holds a Hold rating. However, its average price target of $413.89 suggests a modest 6.8% upside, offering relatively better near-term potential compared to Intel.
