“We Either Build the Terafab or We Don’t Have the Chips”: Musk Signals Tesla’s AI Shift Amid Legal Pressure

Elon Musk made headlines this week across three fronts, from a legal setback tied to his Twitter deal to a new chip project in Texas, claiming, “We either build the Terafab, or we don’t have the chips.” And even a public offer to support airport staff during a U.S. funding lapse. Together, the updates show both near-term pressure and long-term ambition.

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In the meantime, TSLA shares dropped 3.24% on Friday, closing at $367.96.

Court Ruling and TSA Offer Draw Attention

First, a U.S. jury found Musk liable for statements he made in 2022 about fake accounts on Twitter, now called X. Shareholders argued that those posts pushed the stock lower as Musk tried to change the terms of his $44 billion deal. The jury agreed on two statements, though it did not find a broader fraud scheme.

Damages are still under review, but a lawyer for the shareholders said they could reach about $2.5 billion. Musk’s legal team said the ruling is “a bump in the road” and plans to appeal. While the financial hit may be limited for Musk, the case adds to ongoing scrutiny around how his public posts can move markets.

At the same time, Musk drew attention for a different reason. He said he would cover pay for U.S. Transportation Security Administration workers during the current government funding gap. In a post on X, he wrote, “I would like to offer to pay the salaries of TSA personnel during this funding impasse.” The offer comes as about 50,000 workers face delayed pay, though there is no sign yet of a formal plan with federal agencies.

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Terafab Signals Bigger Push Into AI Chips

Meanwhile, Musk outlined a much larger plan that could shape his companies over the long run. He said Tesla, Inc. TSLA -3.24% ▼ and Space Exploration Technologies, aka SpaceX, plan to build a chip plant in Austin, Texas, known as the Terafab. The site would aim to produce chips for AI, robotics, and space use.

Musk said the current chip supply is not keeping up with demand. “We either build the Terafab, or we don’t have the chips,” he said. The project is expected to focus on two types of chips, one for edge and AI use in cars and robots, and another for high-power use in space systems tied to SpaceX and xAI.

The plan is part of a broader push to scale AI capacity. Musk said the long-term goal is to support a terawatt of computing power per year. He also outlined early ideas for space-based data centers, including small satellites capable of handling AI workloads.

However, building chip plants is costly and slow. Such sites can take years to complete and often require tens of billions of dollars in investment. Tesla already works with suppliers like Taiwan Semiconductor Manufacturing Company TSM -2.82% ▼ and Samsung Electronics SSNLF +54.05% ▲ , but Musk has said those partners may not meet future needs.

In summary, the latest updates show Musk facing legal risk in the near term while also moving to secure greater control over AI and chip supply in the future.

Is Tesla Stock a Buy or Hold?

Turning to the Street, Tesla Inc. has a Hold consensus view, based on 31 analysts’ ratings. The average TSLA stock price target is $399.25, implying an 8.50% upside from the current price.

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