Tesla stock climbed more than 6% on Monday after CEO Elon Musk provided a detailed update on the company’s AI chip development, boosting investor optimism about Tesla’s ambitions in autonomous driving and artificial intelligence.
The stock rose 6% to $416.16 in early trading, outpacing broader market gains.
The S&P 500 was up 0.8%, while the Dow Jones Industrial Average added 0.3%.
Musk’s latest comments, shared in a post on X on Sunday, marked the company’s clearest articulation yet of its long-term semiconductor strategy as it expands deeper into robotics and AI infrastructure.
Musk outlines AI5 and AI6 progress
Musk said Tesla is nearing completion of its AI5 chip design and has already begun work on its AI6 processor.
He said the company aims to introduce a new AI chip design into volume production every 12 months, significantly compressing traditional semiconductor development cycles.
“The current version in cars is AI4, we are close to taping out AI5 and are starting work on AI6,” he said.
Musk added that Tesla expects to manufacture chips “at higher volumes ultimately than all other AI chips combined,” emphasising, “I’m not kidding.”
He said Tesla’s in-house engineering team has designed and deployed “several million AI chips” across its cars and data centres, forming the backbone of what he described as the company’s leadership in real-world AI.
He said these chips will “profoundly change the world in positive ways,” pointing to safer autonomous driving and broader applications through Optimus, Tesla’s humanoid robot project.
Musk also used the post to recruit technical talent, asking applicants to send “evidence of exceptional ability” to a dedicated Tesla email address, with a focus on applying cutting-edge AI to chip design.
Melius Research on Tesla stock
Tesla’s stock move was also supported by a new report from Melius Research, which argued that the company is approaching an inflection point in autonomous driving that could drive one of the largest value redistributions in modern industrial history.
Analyst Rob Wertheimer said the firm recently characterised Tesla as a “must own,” writing that “the world is about to change, dramatically.”
Drawing on Ernest Hemingway’s description of bankruptcy happening “two ways, gradually, then suddenly,” Wertheimer said autonomy is following the same trajectory — years of slow progress now giving way to rapid, widespread adoption.
Crucially, Wertheimer said the shift will not threaten Tesla, but rather everyone else. “Our point is not that Tesla is at risk, it’s that everybody else is,” he wrote.
Melius estimates that autonomy is approaching the moment when incremental advances convert into mass-market deployment, transforming what Wertheimer described as “a $7 trillion dollar sector.”
The report predicts that the next five years “will see hundreds of billions in value shift… to Tesla.”
Taken together, Musk’s aggressive chip roadmap and the bullish autonomy forecast reinforced investor conviction in Tesla’s positioning at the center of the AI-driven transition in transportation.
The company’s push to accelerate its chip development cycle and scale future production aligns with its broader strategy to deepen control over its hardware stack and maintain a widening technological lead.
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