Tesla stock traded above aggressive early entries during Monday's stock market as CEO Elon Musk over the weekend explained his reasons for ditching the Dojo supercomputer. Musk also claimed the robotaxi ride-hailing service will soon open to the public.
Tesla stock was added to IBD Leaderboard Monday after shares surged nearly 9% to 329.65 last week, regaining its 50-day and 200-day moving averages, as Tesla offered a big pay deal to Musk, who later teased a big upcoming full self-driving improvement.
On Friday, shares flirted with a downward-sloping trendline from the top of the consolidation.
Musk on Sunday posted to X that he "had to shut down Dojo and make some tough personnel choices" as "it became clear" that the path Tesla's Dojo supercomputer had run into an "evolutionary dead end."
The Tesla CEO said the decision was made with attention shifting to AI6 chips, which will power the company's upcoming self-driving systems known as Hardware 6, or HW6. The company's vehicles currently are on HW4.
Tesla Stock: Musk, Dojo And xAI
Musk's public statement that Dojo is indeed dead comes after Bloomberg reported last week that the EV giant has scrapped its Dojo effort and disbanded the team, as Musk shifts to relying on Nvidia and Advanced Micro Devices for compute chips along with Samsung for manufacturing.
As recently as the Q2 earnings call in late July, musk touted Dojo efforts. The Dojo supercomputer, which Morgan Stanley analyst Adam Jonas said in 2023 could add half a trillion dollars in value to Tesla, was used to train the EV giant's self-driving systems, the humanoid Optimus robot and other AI efforts.
Jonas on Sunday wrote in a investors note that Tesla's decision to ax Dojo could be a sign the EV giant is in a "DOGE-like efficiency drive" to reduce costs. The Morgan Stanley Tesla bull added that Musk's xAI company "has been shouldering more of the AI 'brain' development."
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"Elon Musk's privately held xAI continues to expand its AI capabilities, training on data from X (formerly known as Twitter) as well as real-world vision data from TSLA. A potential scaling back/elimination of Dojo could increase the rationale for further cooperation between Tesla and xAI," Jonas wrote.
Last week, Musk on X said Tesla is streamlining its efforts to focus on developing inference chips to allow its AI models to make decisions in real-time.
"It doesn't make sense for Tesla to divide its resources and scale two quite different AI chip designs," Musk wrote Thursday night. "The Tesla AI5, AI6 and subsequent chips will be excellent for inference and at least pretty good for training. All effort is focused on that."
Tesla also recently signed a $16 billion deal with Samsung in late July for AI chips. At the time, Musk said that Samsung's new Texas fab facility will be "dedicated to making Tesla's next-generation AI6 chip" with the aim of using the new memory chips for Tesla's humanoid robot Optimus, fully autonomous self-driving vehicles and AI data centers.
Robotaxi Tail Winds
Musk also continued to offer hints over the weekend about the future of Tesla's ride-hailing service.
The Tesla head late on Sunday said on X that the robotaxi service will be "open access next month." This would mean that prospective consumers would not need a special invite in order to use the limited ride-hailing service. However, Musk did not make it clear if the ride-hailing service in Austin, Texas, or the one in the Bay Area in California would be "open access."
Tesla officially expanded its ride-hailing service to the Bay Area, with safety drivers, two weeks ago. A relatively small number of Tesla vehicles are operating in the Bay Area and in Austin, Texas. The service is open to influencers and other invitees, not the general public.
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Musk's latest timeline comes after Tesla stock moved higher Friday after Texas regulators officially listed Tesla Robotaxi LLC as a licensed entity, granting the EV giant a rideshare license. The regulatory decision means Tesla will be able to operate its limited ride-hailing service under Texas' new guidelines governing autonomous vehicles operating in the state.
Separately, Musk wrote on X Friday that the full self-driving version in the Austin robotaxi Model Y vehicles is about six months "more advanced than what is available in cars in America and there are some additional breakthroughs in Tesla AI that will make the car feel eerily human."
Tesla Stock Trend
TSLA shares advanced 0.5% to 340.71 during Tuesday's stock market after gaining nearly 3% to 339.03, hitting 346.64 intraday, on Monday, trading above early entries.
This comes after Tesla stock moved above its 50-day and 200-day moving average on Friday, rising 2.3% gain to 329.65.
Prior to Monday, Tesla stock aggressive early entries included Friday's high of 335.15, or the short-term peak of 338. Tesla is still in a new base with a traditional 367.71 buy point, according to MarketSurge analysis. That base is within a much-larger consolidation.
The buy zone for the traditional 367.71 by point extends to 386.10, according to IBD Leaderboard.
However, the relative strength line has lagged for several weeks, reflecting somewhat lagging Tesla performance vs. the S&P 500.
In late July, TSLA undercut its 50-day and 200-day moving averages as Musk warned of a "few rough quarters" ahead in the Q2 conference call.
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As of Tuesday's stock market close, Tesla stock was up around 43% since the April 22 Q1 conference call, lifted by robotaxi bets. Shares are down about 15% for the year, and 30% below their all-time high of 488.54.
Tesla stock has a 21-day average true range of 3.95%. The ATR metric, available on IBD's MarketSurge charting tool, gauges the characteristic breadth of a stock's behavior. Stocks that tend to make large jumps or dives in daily stock market action, the kind that can trigger sell rules and shake investors out of a stock, have a high ATR. Stocks that tend to make more incremental moves have lower ATRs.
Investors can keep tabs on the IBD Leaderboard watchlist, the IBD 50 list of top growth stocks and IBD SwingTrader along with the IBD Sector Leaders list.
Tesla stock has a 63 Composite Rating out of a best-possible 99. The stock also has an 82 Relative Strength Rating and a 54 EPS Rating.
Please follow Kit Norton on X @KitNorton for more coverage.
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