Elon Musk accelerates his bet on AI with a mega chip factory

Elon Musk seeks to expand his bet on artificial intelligence beyond the development of models and systems. While SpaceX regains ground on Wall Street, the entrepreneur is pushing for an investment of US$ 16.8 billion to build a semiconductor megafactory in Texas.

The project, named Terafab, aims to supply chips to SpaceX, Tesla, and xAI and to strengthen the integration among Musk's various companies.

SpaceX has recovered 39% from its historic low

SpaceX shares rose 9.65% on Wednesday, August 12, closing at US$ 146.15. The stock thus accumulated a rebound of 39% from the low of US$ 105.11 recorded six days earlier.

The recovery coincided with expectations about the growth of artificial intelligence within the business. According to a recording of an internal meeting cited in the material, Musk reportedly indicated that AI-related revenues could surpass other sources of SpaceX as soon as September.

The entrepreneur defined artificial intelligence as “extremely important” for the company's future. The message adds a new perspective to expectations about SpaceX's growth.

Terafab: the US$ 16.8 billion chip factory

In southeastern Texas, about 113 kilometers southwest of Houston, Musk plans to build Terafab. The first stage will require an investment of US$ 16.8 billion.

The plant will be aimed at meeting the chip needs of SpaceX, Tesla, and xAI. The goal is to move towards greater vertical integration and reduce dependence on external suppliers for a strategic component.

• xAI needs significant computing power to develop its AI systems.

• Tesla uses chips in its electric vehicles and humanoid robot projects.

Terafab would concentrate three key stages of production: manufacturing, packaging, and testing of semiconductors. Additionally, the plant would generate around 3,000 direct jobs in Texas.

Elon Musk's strategy to secure more computing power

Elon Musk's bet aims to connect different needs of his companies through a single resource: computing power.

The expansion of AI has increased the demand for advanced semiconductors and data centers. In this scenario, having in-house chip production can become a strategic asset for Musk's ecosystem.

The initial investment of US$ 16.8 billion corresponds only to the first stage of Terafab, and the project includes possible future expansions.

What investors expect from SpaceX

SpaceX shares reached US$ 105.11 on August 6, when the first lock-up period following the IPO expired. Since then, the company has recovered 39% in less than a week.

Despite the rebound, the stock is still around 41% below the historic high of nearly US$ 226 reached in mid-June.

According to the data included in the material, the average target price from analysts is US$ 231.40. Compared to the US$ 146.15 from the last mentioned close, this would represent an upside potential of over 58%.

With SpaceX regaining ground and Terafab advancing as an industrial project, Elon Musk seeks to make artificial intelligence an increasingly important piece of his technological ecosystem.