Tesla (TSLA +1.38%) and Elon Musk are making a big push to expand beyond electric vehicles (EVs). The company recently completed a tape-out for its upcoming AI5 computer chip, which will be deployed in new projects such as the Optimus humanoid robot.
Here’s what the news means for Tesla and how it could impact the stock price in the years ahead.
Today’s Change
(1.38%) $5.18
Current Price
$380.30
Key Data Points
Market Cap
$1.4T
Day’s Range
$368.60 – $387.81
52wk Range
$288.77 – $498.83
Volume
2.2M
Avg Vol
56.8M
Gross Margin
19.07%
Expanding beyond vehicles
A tape-out is when a computer chip design is sent to manufacturers for fabrication, essentially a final blueprint for the project. The AI5 chip has been sent to Samsung and Taiwan Semiconductor, with manufacturing planned to ramp over the next 12 to 18 months.
Tesla’s latest chip boasts a 40x performance boost over the previous generation, and its goal is to help scale the two latest endeavors for the Musk technology company in humanoid robots and the Cybercab self-driving vehicle. Unlike other players in the robotics and self-driving car space, Tesla has designed its own chips, which should give it a cost advantage over those that rely on expensive suppliers like Nvidia.
In the long run, Tesla plans to build its own semiconductor manufacturing facility to further vertically integrate its robotics and artificial intelligence (AI) vision. The project, called Terrafab, will be built in Texas in conjunction with Space Exploration Technologies (SpaceX) and Intel. Like with its own chip designs, the theory is that this vertical integration will give Tesla a cost advantage as it scales up humanoid robot manufacturing in the years ahead.
Image source: Getty Images.
The future of Tesla stock
Tesla is already working on designs for the AI6, which is reportedly being manufactured by Samsung. If you solely look at Musk’s vision, there is a lot for shareholders to be excited about today. Who wouldn’t want a future in which humanoid robots perform menial tasks, with everyone driven around by a self-driving Cybercab network?
Today’s Change
(1.38%) $5.18
Current Price
$380.30
Key Data Points
Market Cap
$1.4T
Day’s Range
$368.60 – $387.81
52wk Range
$288.77 – $498.83
Volume
2.2M
Avg Vol
56.8M
Gross Margin
19.07%
This vision is far from a reality right now. Plus, Tesla’s stock already prices in much of this vision, which isn’t guaranteed to come to fruition. Its market cap is $1.4 trillion, with a price-to-earnings ratio (P/E) of 348.
It is smart for Tesla to design its own chips and eventually build its own chip factories. However, many pieces still need to come together over the next decade, and executing the humanoid robot vision should keep investors away from the stock at today’s $1.4 trillion market cap.
Brett Schafer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Intel, Nvidia, Taiwan Semiconductor Manufacturing, and Tesla. The Motley Fool has a disclosure policy.
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