Tesla CEO Elon Musk aims for Tesla to build chips at higher volumes than all other AI chips combined. The company plans to release a new chip annually, competing with Nvidia. AI is essential for Musk’s ambitious goals of autonomous vehicles, humanoid robots, and energy solutions.

Tesla’s HW3 and HW4 chips focus on vehicle operations, with HW4 offering significant improvements in performance, energy efficiency, and thermal behavior. These chips are also used in Tesla’s humanoid robots for various functions like vision perception and motion planning.

Tesla is already planning for AI5 and AI6 chips, with AI5 set for volume production in 2026. AI5 is expected to be 40 times more powerful than AI4. Tesla uses a dual-foundry approach with Samsung and Taiwan Semi for chip manufacturing, reducing reliance on external chipmakers and allowing customization for specific needs.

Tesla’s Q3 2025 results showed a 12% revenue increase to $28.1 billion, driven by non-automotive segments like energy and services. However, earnings per share fell to $0.50, missing projections. Deliveries rose by 7%, but production declined by 5%, reflecting market demand fluctuations and increased competition.

Tesla stock is up 3.9% YTD, with analysts giving a “Hold” rating and a high target price of $600, indicating a 43.6% upside potential. Out of 41 analysts, 14 rate it as “Strong Buy,” two as “Moderate Buy,” 16 as “Hold,” and nine as “Strong Sell.” No positions held by the author.

Read more at Yahoo Finance: Tesla Is Looking for ‘Exceptional Ability’ in AI Chips. Does That Make TSLA Stock a Buy Here?