What Happened?
Shares of electric vehicle pioneer Tesla (NASDAQ: TSLA) jumped 7.4% in the afternoon session after CEO Elon Musk announced a major breakthrough for the company’s future technology.
Musk shared that Tesla successfully finished the design phase for its new AI5 chip. This "tape-out" milestone means the high-powered chip is now ready to be manufactured. Investors are excited because this hardware will power Tesla’s next generation of self-driving cars and its Optimus robots. This update signals that the company is moving quickly toward its goals in artificial intelligence and robotics. The tech sector also saw particularly strong performance, driven by excitement around AI.
Underscoring this trend, reports emerged that Uber is investing over $10 billion to acquire a fleet of autonomous vehicles. This move signals a major strategic shift for the company and highlights the massive capital flowing into AI-driven technologies, boosting confidence across the industry and affecting related players like Alphabet's Waymo and Tesla.
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What Is The Market Telling Us
Tesla’s shares are very volatile and have had 22 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 1 day ago when the stock gained 3.7% on the news that UBS upgraded the stock to Neutral from Sell, pointing to a more balanced risk-reward profile.
The analyst noted that Tesla's recent stock decline had priced in near-term demand challenges, making its valuation more reasonable. While risks remained, UBS expected eventual progress on the company's long-term goals in physical AI, such as its robotaxi project and Optimus robot. The firm kept its price target at $352. Adding to the positive sentiment, Dutch regulators approved Tesla's Full Self-Driving supervised software for use in the Netherlands. The company also announced its Spring Update, a broad software release that introduced a voice-activated Grok AI assistant and other new features.
Tesla is down 10.2% since the beginning of the year, and at $393.49 per share, it is trading 19.7% below its 52-week high of $489.88 from December 2025. Despite the year-to-date decline, investors who bought $1,000 worth of Tesla’s shares 5 years ago would now be looking at an investment worth $1,598.
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