Tesla is reportedly scrapping its Dojo supercomputer effort and disbanding the team, as CEO Elon Musk shifts to relying on Nvidia and Advanced Micro Devices for compute chips along with Samsung for manufacturing.
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.
Musk touted Dojo efforts on the Q2 earnings call in late July.
However, late Thursday Bloomberg reported that Tesla is disbanding the Dojo team and that project leader Peter Bannon is leaving the company.
The Dojo supercomputer team recently lost around 20 employees to startup DensityAI, founded by the former head of Dojo.
The remaining Dojo workers will be reassigned to other data center and compute projects, according to Bloomberg.
Musk Confirms Shifting Chips Strategy
Following the report, Musk on X late Thursday 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," Musk added.
This comes as Tesla 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.
Tesla's plans seem to be for AI5 and AI6 chips to power the company's upcoming self-driving systems know as Hardware 5 and Hardware 6, or HW5 and HW6. The company's vehicles currently are on HW4.
Tesla Stock: Robotaxi Update
Tesla stock advanced 2.3% to 329.68 at Friday's stock market close, making a move above its 50-day and 200-day moving averages.
The advance Friday above the 50-day and 200-day lines could offer a trendline entry or, alternatively, 338 could be another early entry, according to MarketSurge analysis.
TSLA shares gained ground 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 is still in a new base with a traditional 367.71 buy point. That base is within a much-larger consolidation.
However, the relative strength line has lagged for several weeks, reflecting somewhat lagging Tesla performance vs. the S&P 500.
Tesla Stock Trend
Shares rallied nearly 9% this week, as Tesla offered a big pay deal to Musk, who later teased a big upcoming FSD improvement.
The previous week, TSLA shares fell 4.25% amid broad market selling and as Tesla officially expanded its ride-hailing service to the Bay Area, with safety drivers. 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.
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.
The stock initially soared after the robotaxi launch but TSLA is now up more than 2% since the June 22 service release.
Stocks To Buy And Watch: Top IPOs, Big And Small Caps, Growth Stocks
As of Friday's close, Tesla stock was up 38% since the April 22 Q1 conference call, lifted by robotaxi bets. Shares are down about 18% for the year, and 32% below their all-time high of 488.54.
Tesla stock has a 21-day average true range of 3.86%. 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 59 Composite Rating out of a best-possible 99. The stock also has an 82 Relative Strength Rating and a 55 EPS Rating.
Please follow Kit Norton on X @KitNorton for more coverage.
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