Elon Musk’s Terafab Project First Step Towards Tesla-SpaceX Merger, Says Wedbush

• In the coming years, chip and memory supply are expected to be the greatest constraint in AI advancements and the Terafab project will help resolve it for Tesla, the analyst said. 
• The Tesla bull kept an ‘Outperform’ rating on the stock and a $600 price target. 
• Terafab will integrate chip design, fabrication, mask production, packaging and testing into a single complex in Austin.

Tesla Inc.’s (TSLA) Terafab project will set the foundation for the EV giant to become an artificial intelligence powerhouse over the coming years, according to Wedbush analyst Dan Ives.

Ives said in a note on Tuesday that Terafab marks a baby step towards the company’s eventual merger with Elon Musk’s SpaceX. He added that he sees the project accelerate Tesla’s AI path despite the uncertainty around its timeline.

In the coming years, chip and memory supply are expected to be the greatest constraint in AI advancements and the Terafab project will help resolve it for Tesla, the analyst said.

“We also believe this is the first step to ultimately what will be Tesla and SpaceX combining forces in a merger likely in 2027,” Ives said in the note. The Tesla bull kept an ‘Outperform’ rating on the stock and a $600 price target.

Musk’s AI startup xAI recently merged with SpaceX, and Tesla currently holds a small stake in the combined entity.

What Is Terafab?

Elon Musk formally unveiled Terafab earlier this month during a presentation at Austin’s former Seaholm Power Plant, calling it “the most epic chip-building exercise in history by far.”

The planned semiconductor fabrication facility — a collaboration between Tesla and Musk’s privately-held company SpaceX — will integrate chip design, fabrication, mask production, packaging and testing into a single complex in Austin capable of eventually producing more than one terawatt of computing capacity annually.

“Either we make Terafab or we will be stuck at the ~20% chip/memory output growth per year of the current industry,” Musk said at the time, while also terming Terafab “the final missing piece of the puzzle.” The facility would supply chips for Tesla’s vehicles, Optimus humanoid robots and future space-based AI infrastructure, the billionaire CEO added.

How Did Stocktwits Users React?

On Stocktwits, retail sentiment around TSLA stock stayed within the ‘extremely bearish’ territory over the past 24 hours, while message volume remained at ‘high’ levels.

TSLA stock has gained 38% over the past 12 months. 

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