Elon Musk has just announced an ambitious project that he described as a “Herculean” task for Tesla.
The electric vehicle company plans to build two new chip factories at its facility in Austin, Texas, in collaboration with SpaceX.
This advanced AI chip complex is expected to support electric vehicles, the Optimus humanoid robot, and artificial intelligence (AI) data centres, including computing infrastructure for space‑based operations.
However, the large‑scale project is expected to require extremely high costs and significant complexity, according to Barchart.
Morgan Stanley analysts believe that building a complete chip ecosystem from scratch, covering logic, memory, and packaging processes, is a major challenge.
They estimate that a budget of more than US$20 billion over several years may still be insufficient to cover the full development needs.
Based in Austin, Texas, Tesla is known as one of the global leaders in the electric vehicle industry.
The company produces electric cars, energy storage systems, and solar products, with major manufacturing hubs in the United States, Europe, and China, as well as a global network of showrooms and service centres.
In recent months, Tesla has faced investor concerns due to declining vehicle deliveries, intensifying competition in the EV and self‑driving technology sectors, and debates surrounding the company’s AI strategy, including its semiconductor factory plans.
These factors have contributed to volatility in the company’s shares, which have a market capitalisation of around US$1.44 trillion.
Although Tesla’s shares are still up about 36.5% over the past 12 months, their performance this year has been less impressive, with a decline of around 12.5%.
The stock reached a 52‑week high of US$498.83 in December 2025 but is now down about 22% from that level.
Tesla’s valuation also remains very high, with a forward price‑to‑non‑GAAP earnings ratio of 184.12 times, far above the industry average of around 14.51 times.
Tesla’s fourth‑quarter performance report shows pressure on growth.
Vehicle deliveries fell 16% year on year to 418,227 units, while production dropped 5% to 434,358 units.
On the other hand, Full Self‑Driving (FSD) subscriptions rose 38% to 1.10 million users.
Tesla’s automotive revenue fell 11% to US$17.69 billion, bringing total revenue down 3% to US$24.90 billion.
Operating margin narrowed to 5.7%, while adjusted EBITDA margin declined to 16.7%.
Fourth‑quarter free cash flow also weakened 30% to US$1.42 billion, while non‑GAAP earnings per share (EPS) fell 17% to US$0.50.
Even so, some Wall Street analysts remain optimistic about Tesla’s earnings growth.
For the current quarter, EPS is expected to rise 60% to US$0.24. Annually, EPS is projected to increase 32.1% to US$1.44, and rise again by 35.4% to US$1.95 the following year.
Meanwhile, the National Highway Traffic Safety Administration has expanded its investigation into Tesla’s FSD system, raising concerns among some analysts.
GLJ Research has maintained a “Sell” recommendation, arguing that potential hardware upgrades could affect the company’s robotaxi plans.
Conversely, Tigress Financial has initiated coverage with a “Buy” recommendation and a price target of US$550, viewing Tesla’s transformation into a layered physical AI platform as a long‑term growth driver, particularly through FSD, robotaxis, and the Optimus humanoid robot.
Wedbush Securities has also maintained an “Outperform” rating with a price target of US$600.
Overall, Wall Street’s analyst consensus currently sits at “Hold”. Of 43 analysts, 15 rate the stock as “Strong Buy”, two as “Moderate Buy”, 17 as “Hold”, and nine as “Strong Sell”.
The average price target of US$408.42 suggests potential upside of around 5.2% from current levels, while the highest target of US$600 reflects potential upside of up to 54.5%.
Tesla is now at a critical point in its transformation into a physical AI‑driven company. Over the past year, it has expanded FSD development, introduced robotaxi services, prepared the Cybercab production line, and refined the Optimus robot design.
The success of the large‑scale chip facility project will be a key factor in Tesla’s future growth. For now, many analysts believe investors should closely monitor further developments before making decisions. (DK/LM)
Originally written by: Lisa Monica, Dhika Priambodo
Source: IDN Financials
Published on: 28 March 2026
Link to original article: Elon’s AI chip project is a huge effort and a risk to Tesla stock
