Shares of Tesla extended their recovery on Wednesday, rising about 4% in early trading to $378.89.
The move was supported by broader market optimism and company-specific developments around its artificial intelligence initiatives.
The gains came as the S&P 500 advanced 0.2%, moving closer to a new all-time intraday high amid investor expectations that the Iran conflict could be nearing an end.
The Nasdaq Composite climbed 0.5%, while the Dow Jones Industrial Average declined 138 points, or 0.3%.
AI5 chip milestone marks strategic shift
Tesla Chief Executive Officer Elon Musk said the company’s AI chip design team has completed work on its AI5 self-driving chip.
He described the development as a key milestone as the project moves into manufacturing.
Musk thanked Samsung Electronics and Taiwan Semiconductor Manufacturing Company for their role in bringing the chip toward production, adding that AI5 could become “one of the most produced AI chips ever.”
He has previously indicated that AI5 chips are expected to enter high-volume production in 2027, eventually replacing the current AI4 chips used in Tesla vehicles.
More recently, Musk said Tesla could “tape out” its next-generation AI6 chip as early as December.
Wall Street analysts on Tesla stock
Barclays reiterated an Equalweight rating on Tesla with a $360 price target, as the company increasingly pivots from traditional automotive operations toward artificial intelligence and robotics.
Analyst Dan Levy said Tesla’s fourth-quarter results marked the end of Model S and Model X production, signalling a transition toward what the company describes as “Physical AI.”
He noted that Tesla’s growth strategy is now centred on autonomy, including Robotaxi and Full Self-Driving technology, as well as humanoid robotics.
The company has also outlined ambitious infrastructure plans, including a proposed “Terafab” facility with 1 terawatt of capacity—estimated to be 50 times larger than current global AI computing capacity—and a goal to build 100 gigawatts of solar capacity.
Barclays estimates the Terafab project could cost in the mid-single-digit trillions of dollars if fully developed, and expects Tesla’s capital expenditure to exceed the more than $20 billion outlined in its most recent earnings call.
Despite the strategic pivot, Tesla shares remain under pressure, down 19% year-to-date compared with a 2% gain in the S&P 500.
According to Barclays, the decline reflects limited disclosed progress on key initiatives such as Robotaxi, Full Self-Driving, and the Optimus humanoid robot program.
In a separate note released earlier in the week, UBS analyst Joseph Spak upgraded Tesla to Hold from Sell while maintaining a $352 price target.
Spak said current share levels “more evenly balance” near-term risks, including softer electric vehicle demand and increased spending on AI-driven initiatives such as robo-taxis and humanoid robots.
The analyst cautioned that “the stock may continue to exhibit high volatility,” noting that Tesla’s trading behaviour is often driven more by sentiment and momentum than by underlying fundamentals.
UBS expects Tesla’s vehicle deliveries to reach about 1.6 million units in 2026, broadly flat on a year-on-year basis, before growing at a 7% compound annual rate to around 2 million units by 2030—below broader market expectations of 3 million.
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