Tesla Inc. (NASDAQ:TSLA) CEO Elon Musk is ramping up efforts to build an in-house artificial intelligence chip, the AI5, but Gene Munster warns that moving away from Nvidia Corp. (NASDAQ:NVDA) has proven far more difficult than Musk's ambitious projections suggest.
Elon Musk Says He ‘Dreams About Chips'
At Tesla's annual shareholder meeting on Thursday, Musk said he is "super hardcore on chips right now," underscoring that developing a custom AI chip is key to advancing Tesla's robotics and self-driving programs.
He stated that Tesla's upcoming AI5 chip will deliver roughly comparable performance to Nvidia's new Blackwell chip while using only one-third of the power and costing less than 10% as much.
Musk said Tesla's advantage comes from building chips specialized for its software stack rather than catering to a wide range of applications, as Nvidia must do.
He also highlighted Tesla's use of integer-based inference — which he described as more power and silicon-efficient than floating-point operations — though it requires specialized training.
The AI5 chip will be manufactured by both Taiwan Semiconductor Manufacturing Co. (NYSE:TSM) and Samsung Electronics Co. (OTC:SSNLF), with production spread across facilities in Taiwan, South Korea, Arizona and Texas.
Musk added that Tesla already has plans for the AI6 chip, expected to double performance within a year of AI5's rollout.
See Also: Tesla’s $1 Trillion Illusion: Elon Musk’s Pay Package And The Robotaxi Myth
Gene Munster Cautions Against Underestimating Nvidia
Deepwater Asset Management managing partner Munster reacted to Musk's comments, saying Tesla's goal to move away from Nvidia is easier said than done.
"Musk says they're building their own chip for inference, reducing the need for Nvidia GPUs," Munster noted. "He's talked about moving away from $NVDA before and it's proven extremely hard to do."
He added that while Tesla could work with Intel Corp (NASDAQ:INTC) or build a large chip fabrication plant, "they have better places" to spend $20 billion.
Cathie Wood Backs Tesla's AI Ambitions
Earlier this week, ARK Invest CEO Cathie Wood also weighed in, calling Tesla's AI5 chip a potential game-changer after tech advisor Brian Roemmele said it could be "40 times faster" and "10 times cheaper per inference" than Nvidia's hardware.
"If Brian Roemmele thinks Tesla's A15 chip will be a big deal, then it will be a big deal," Wood wrote on X at the time.
Musk later confirmed that sample chips could arrive in 2026, with full-scale production likely in 2027.
Last month, Tesla reported third-quarter revenue of $28.1 billion, a 12% year-over-year increase that beat Wall Street's consensus estimate of $26.24 billion.
The stock closed at $445.91 on Thursday, down 3.54%, before rising 1.57% to $452.90 in after-hours trading. According to Benzinga's Edge Stock Rankings, Tesla continues to show a strong upward trend across short, medium and long-term periods. Click here for a detailed look at how it compares with its peers and competitors.
Read More:
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Photo courtesy: Shutterstock
