Tesla Shares Rise After Software Update and Chip Progress Announcement

Tesla shares rose more than 6% on Wednesday after the company released a software update for its vehicles and announced progress on its forthcoming AI5 chip. S.

and handles tasks such as steering, lane changes, and parking under driver supervision, but it does not enable autonomous driving. The chip progress was highlighted in a post on the social network X, where the company stated that the AI5 chip has reached a key engineering milestone and is approaching production.

Tesla plans to construct two advanced chip factories in Austin, Texas, in partnership with SpaceX.

One factory will produce chips for vehicles and robots, while the other will make chips for orbital data centers. Intel has joined the Terafab project involving Tesla and SpaceX.

Analyst Upgrade and Vehicle Lineup UBS analysts upgraded their rating on Tesla stock from sell to hold on Tuesday and raised the price target by about $1 to $352.

The analysts noted that Tesla's work on a new, smaller SUV is a development that addresses the current limited offerings in light-duty vehicles. Tesla's current lineup consists of the Model 3 sedan, Model Y SUV, and Cybertruck. The company has discontinued sales of its Model S and Model X vehicles to reallocate part of its Fremont, California, factory for production of the Optimus humanoid robot, which is under development.

This transition reflects ongoing efforts to expand beyond traditional vehicles into robotics and advanced computing. The stock movement occurs amid broader developments in Tesla's autonomous driving technology.

Software Enhancements and Testing The Spring update also modified in-vehicle capabilities of an AI chatbot, allowing drivers to activate it hands-free by saying 'Hey Grok' in Tesla electric vehicles.

The company is testing a small number of driverless vehicles in its Robotaxi ride-hail service in Austin, Texas. These tests are part of efforts to advance toward robotaxi-ready vehicles, though full deployment has not yet occurred. Tesla has been developing self-driving systems for over a decade, with incremental improvements over time.

Vehicle owners can monitor their usage through the updated software interface.

Broader Context and Future Plans The chip factories in Austin represent an investment in domestic production for AI and computing needs in Tesla's ecosystem.

Partnership with SpaceX extends collaboration between the companies on technology infrastructure. Intel's involvement in the Terafab project adds expertise in semiconductor manufacturing. Tesla's first-quarter vehicle deliveries were reported at 358,000, down 14% from the previous quarter.

This figure provides context for the company's operational performance amid investments in new technologies. The software and chip announcements align with Tesla's strategy to integrate advanced AI into its products.