Tesla CEO Elon Musk announced plans for the company to design its own AI chip, the AI5 processor, to power self-driving and robotics. Musk hinted at building a “gigantic chip fab” and partnering with Intel. Tesla’s stock valuation is a concern for investors due to high multiples compared to traditional automakers.

In Q3, Tesla reported record revenue growth but saw squeezed profits with rising costs. Despite this, free cash flow hit a record high, and the company holds ample cash reserves. Musk emphasized the need to invest in autonomy and AI while hinting at upcoming expansions like Cybercab and Megapack 3 in 2026.

Wall Street analysts have mixed opinions on Tesla’s future, with some optimistic about the potential of AI and robotics initiatives while others express concerns about valuation and execution risks. The stock currently trades at a high P/E ratio, and future momentum depends on consumer demand and the success of new technologies like robotaxis.

Investors must weigh the long-term potential of Tesla’s AI and robotics ventures against its current high valuation and profit margin pressures. The company’s shift towards becoming an AI-and-robotics powerhouse presents both opportunities and risks for investors, who must decide if the stock’s price already reflects future success or if there is still room for growth.

Read more at Yahoo Finance: As Musk Hints That Tesla Could Make Its Own AI Chips, Should You Buy TSLA Stock?