Tesla (TSLA), the electric vehicle maker, moved higher in premarket trading on Wednesday after CEO Elon Musk shared a key update on the company’s AI roadmap. In a post on X, Musk said Tesla has “taped out” its next-generation AI5 chip, marking the end of the design phase and the start of the manufacturing process.
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Trade TSLA with leverageThe update signals that Tesla has completed the design phase of the chip and is now moving toward manufacturing.
What Tesla’s AI5 Chip Means
The AI5 chip is expected to power Tesla’s next generation of self-driving systems.
In simple terms, a “tape-out” means the chip’s design is finalized and sent to manufacturing partners such as TSMC (TSM) and Samsung Electronics (SSNLF). From here, the focus shifts to testing and scaling production.
Musk said the AI5 chip could enter mass production around 2027 and eventually replace the current AI4 hardware used in Tesla vehicles. He also suggested that the chip could become one of the most widely produced AI chips, reflecting the company’s long-term ambitions in autonomous driving.
What Comes Next: AI6 and Dojo 3
Tesla is already working on what comes next. Musk noted that development of the AI6 chip is underway, with a possible tape-out as early as late 2026.
The company is also advancing its Dojo supercomputer, which is used to train AI models for self-driving. The next version, Dojo 3, is expected to further improve Tesla’s ability to process large amounts of driving data.
These efforts are part of Tesla’s broader push to build its AI stack in-house, from chips to software.
Why This Matters for Investors
The milestone shows that Tesla is moving deeper into AI, beyond its core auto business. By designing its own chips, the company reduces reliance on external suppliers and gains more control over performance and costs.
This is especially important as the race to develop fully autonomous driving systems continues.
Following the update, Tesla stock rose about 0.6% in premarket trading, showing a modest but positive reaction from investors.
Is TSLA Stock a Buy, Hold, or Sell?
Tesla continues to split the Street’s analysts’ views with a Hold consensus rating. Out of 30 ratings, 13 analysts rate the stock a Buy, while eleven analysts rate it a Hold, and another six rate it a Sell. The average TSLA stock price target is $402.29, suggesting a 10.46% upside from the current price.
