Tesla stock is rising as CEO Elon Musk makes it clear who will own and operate his mega-chip project, Terafab.
Shares of the electric-vehicle maker were up 3.3% in early trading Friday at $387.43 while the S&P 500 and Dow Jones Industrial Average were up about 0.3%.
A few factors drove the early move. For starters, there is SpaceX.
Its shares were up 1.4% in early trading after the company bought wireless spectrum to advance its wireless communications business. Tesla doesn’t have a wireless communications business, but SpaceX and Tesla stock sometimes trade in tandem. Many Tesla investors and analysts expect Musk to combine the companies someday.
Wall Street is helping, too. Tigress Financial analyst Ivan Feinseth reiterated its Buy rating and $550 price target ahead of third-quarter earnings, due on Oct. 21, according to ratings aggregators. Tigress didn’t immediately respond to a request for the full report.
Feinseth is optimistic about Tesla’s AI efforts, including robo-taxis, robots, and its Full Self-Driving driver assistance product, which costs Tesla owners $99 a month.
Key to Tesla’s—and SpaceX’s—ambitions is semiconductors. Musk believes that chips are a key constraint to AI growth, and his two trillion-dollar companies are building a semiconductor facility, called Terafab, in Texas.
Terafab is another example of Musk-sized ambition. Eventually, Musk envisions a 100-million-square-foot facility that includes chip making, advanced packaging, assembly, and testing. It would be 10 times the size of Tesla’s EV-producing gigafactory in Austin, Texas, and 30 times the size of Taiwan Semiconductor Manufacturing’s Arizona chip fab today. (That fab will expand in size as well.)
The Terafab project will cost more than $100 billion. The initial phase will cost $10 to $20 billion, shared by Tesla and SpaceX.
Intel and Taiwan Semi are helping Musk’s companies, perhaps a little like how Panasonic helped Tesla build its EV battery capacity. Musk was clear earlier this week on X, however. Tesla and SpaceX will own and operate Terafab. TSM and others can lease space if they want to.
Investors should expect a Terafab update when Tesla reports third-quarter numbers. As for earnings, Wall Street is looking for earnings per share of 45 cents from sales of $28.3 billion. A year ago, Tesla reported EPS of 50 cents from sales of $28.1 billion.