AI5 Chip Breakthrough: Tesla Announces Reboot of Dojo 3 Supercomputer Project to Secure Autonomous Driving Compute Independence

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Tesla CEO Elon Musk recently announced that with the design of the AI5 chip now complete, Tesla (TSLA) will reboot the development of its Dojo 3 supercomputer project. The Dojo project aims to provide massive computing power for autonomous driving systems and AI models through self-developed chips and systems, reducing reliance on external suppliers.

Analysts believe the AI5 chip will support more complex Full Self-Driving (FSD) algorithms. The progress of the chip’s mass production will directly influence the rollout speed of Tesla’s FSD features and could become a critical pillar for its robotics business.

Musk’s Announcement

On January 19, Musk posted on the social media platform X that Tesla will restart the development of the Dojo 3 supercomputer project following the completion of the AI5 chip design.

Simultaneously, he posted recruitment information seeking talent interested in “developing the world’s highest-volume chip,” requiring applicants to summarize key technical challenges they have solved in three bullet points.

In subsequent posts, Musk emphasized: “Solving the AI5 chip issue is critical for Tesla. Therefore, I had to have both teams focus on this chip’s development, and I have personally spent every Saturday on it for several months.”

Musk noted that AI5 will be an exceptionally powerful chip: a single SoC’s performance is roughly equivalent to Nvidia’s Hopper(NVDA) class, while a dual-chip configuration approaches Blackwell levels—but at a significantly lower cost and power consumption. “With AI5 progressing smoothly, we finally have some bandwidth to restart the R&D for Dojo 3,” he stated.

This marks a strategic reversal. In August 2025, reports suggested that Tesla had fully suspended the Dojo project, leading to the departure of project lead Peter Bannon. At the time, the move was interpreted as Tesla abandoning its self-developed autonomous driving chip plan.

Musk previously explained that it made little sense for Tesla to divide resources between two vastly different AI chip designs. He noted that Tesla’s AI5, AI6, and subsequent chips would excel in inference and perform well in training, and that all efforts would be concentrated there. He added that integrating multiple AI5/AI6 chips onto a single circuit board for supercomputer clusters could reduce networking complexity and costs by several orders of magnitude.

First mentioned in 2019, the Dojo project carries Tesla’s grand vision for AI. It is designed to optimize neural network models and process autonomous driving video data. Morgan Stanley previously estimated that a fully operational Dojo could potentially add billions of dollars to Tesla’s valuation.

A Decisive Battle for Autonomous Driving

Musk recently revealed that the AI5 chip for FSD is nearing design completion, while AI6 is in its early stages. Tesla aims to complete design cycles for AI7, AI8, and AI9 within a nine-month cadence.

According to previously disclosed data, the AI5 chip will deliver 2,000–2,500 TOPS of computing performance—roughly five times that of the current HW4 chip—enabling more sophisticated FSD algorithms.

Sampling and small-scale deployment of the AI5 chip are scheduled for 2026, with full mass production expected in 2027. As AI5 nears the finish line, Tesla has initiated early work on AI6, which is expected to launch in 2028. AI6 will likely continue Tesla’s foundry partnership with Samsung Electronics, utilizing a modular architecture deeply integrated with the Dojo supercomputer ecosystem to create synergy across vehicles, robots, and supercomputing.

Recent reports indicate that Samsung Electronics is accelerating preparations for AI5 production at its U.S. facilities, recruiting experienced engineers to stabilize yields and ensure a smooth manufacturing process for Tesla.

Shift to FSD Subscription Era

Alongside hardware updates, Tesla’s FSD strategy is undergoing a major shift. Musk recently announced that starting February 14, Tesla will discontinue the one-time purchase option for FSD in favor of a monthly subscription model.

This marks the end of a decade-long era of one-time buyouts (previously $8,000 in the U.S. and 64,000 RMB in China). Analysts point out that this “SaaS” (Software as a Service) approach aims to lower the barrier to entry, increase penetration, and generate recurring revenue.

Musk has hinted that the next version of FSD will achieve full autonomy, even admitting that Robotaxi driverless testing has already begun. Morgan Stanley views FSD 14.3 as a potential “Steam Engine Moment” for autonomous driving, which is shaping up to be a primary investment theme for Wall Street in 2026.

Micron Executive Warns of “Unprecedented” Memory Shortage as Traditional Electronics Face Severe Supply Squeeze

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A top executive at Micron Technology recently stated that the shortage of memory chips has accelerated significantly over the past quarter, reiterating that the supply crunch will persist beyond this year due to surging demand for high-end semiconductors driven by AI infrastructure.

On Friday, January 16, Manish Bhatia, Micron’s Executive Vice President of Global Operations, stated in an interview: “The shortage we are seeing right now is truly unprecedented”—a sentiment that echoes the company’s forecasts from last month.

Bhatia noted that HBM (High Bandwidth Memory), essential for AI accelerators, is “consuming a massive amount of the industry’s available capacity, leading to significant supply gaps in traditional sectors such as smartphones and PCs.”

Last month, Micron Technology (MU) CEO Sanjay Mehrotra stated during an earnings call that the total addressable market (TAM) for HBM is expected to grow at a compound annual growth rate (CAGR) of approximately 40%, rising from roughly $35 billion in 2025 to about $100 billion by 2028.

Bhatia added that manufacturers of PCs and smartphones have already joined the scramble to secure memory chip supplies for 2026 and beyond. Meanwhile, the rise of autonomous vehicles and humanoid robots is expected to further drive up demand for these components.

In December last year, market research firm Counterpoint Research estimated that global smartphone shipments would decline by 2.1% in 2026, as memory shortages drive up Bill of Materials (BoM) costs. Major manufacturers, including Dell Technologies, have also warned that the ongoing memory shortage is likely to impact their operations.

Driven by the AI boom, the stock prices of the “Big Three” global memory giants—Micron (MU), SK Hynix, and Samsung Electronics—surged throughout 2025. SK Hynix has already stated that its chip production capacity for 2026 is fully sold out.

To prioritize supply for strategic enterprise customers like Nvidia, Micron announced last month that it would terminate its Crucial consumer business. The AI industry’s “insatiable” demand for memory has also accelerated Micron’s capacity expansion efforts in the U.S. and Asia.

“Our facilities in Asia will continue to transition to next-generation technologies,” Bhatia said during the interview, adding that almost all new wafer capacity will be located in the United States. Previously, Micron committed to shifting 40% of its DRAM manufacturing capacity to U.S. soil.

UBS Shifts Long-Term Themes: Betting on Digital Consumers and Enabling Tech while Pivoting Away from Gene Therapy and Digital Health

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UBS Group AG(NYSE:UBS) has released a research report stating that, according to its proprietary long-term investment theme model, five specific themes currently offer the most compelling investment opportunities. These five primary themes are: Digital Consumers, Enabling Technologies, Diversity and Equality, Family Businesses, and Searching for New Frontiers. Conversely, the themes of Gene Therapy and Digital Health are expected to face short-term headwinds; UBS suggests investors take a tactical step back to review their exposure in these areas.

UBS explained that to identify attractive entry points for long-term themes, the bank utilizes a quantitative model combined with qualitative input from thematic analysts. The quantitative model primarily relies on metrics such as valuation, momentum signals, and fundamental quality. Qualitative factors include alignment with the Chief Investment Office’s (CIO) core views, key risks, and potential new catalysts.

Below are the five preferred long-term investment themes identified by UBS:

1. Digital Consumers

Investment Logic: Younger generations are digital natives whose consumption patterns differ from their parents and influence older generations’ behaviors. Due to digitalization, there are more touchpoints influencing consumer decisions than ever before, rewriting the rules of online business. For younger people, sharing experiences or spending on experiences is often more important than owning physical goods. Artificial intelligence will revolutionize every aspect of our lives, giving rise to new experiences. The combination of traditional sectors (travel and leisure) with emerging virtual domains (e-commerce, metaverse, social media, advertising) represents the key investment opportunity within this theme.

Why Invest Now: The Digital Consumer theme ranks first among UBS’s five long-term themes this month, driven by high scores in quality metrics, as it involves companies with robust balance sheets and high returns on invested capital (ROIC). In terms of momentum, it benefits from the solid performance of the tech sector driven by AI trends. However, it is worth noting that its valuation remains relatively high.

2. Enabling Technologies

Investment Logic: As generative AI accelerates technological convergence, UBS has identified five enabling technologies—Artificial Intelligence, AR/VR, Big Data, Blockchain, and other disruptive technologies—which the bank believes will transform numerous industries.

Excluding blockchain, UBS expects the market size of the other four technologies to grow at an average annual rate of 35% from $287 billion in 2022 to $3.2 trillion by 2030. The bank believes AI is likely to drive the largest incremental growth, accounting for 90% of the absolute growth in these markets (in USD terms). The bank continues to view AI as one of the most profound technological shifts of this decade, noting that investors will best benefit by focusing on software and semiconductor companies with strong pricing power and high barriers to entry.

Specifically, UBS forecasts that global AI capital expenditure will reach $423 billion this year and grow to $1.3 trillion by 2030, representing a compound annual growth rate (CAGR) of 25% between 2025 and 2030. Furthermore, the bank has raised its broader AI Total Addressable Market (TAM) forecast to $3.1 trillion by 2030, up from a previous estimate of $2.6 trillion, implying a CAGR of 30% over the same period.

Why Invest Now: Enabling Technologies remains among UBS’s top five themes due to its exceptionally high momentum score. The bank’s thematic bias toward the Information Technology sector provides solid momentum.

3. Diversity and Equality

Investment Logic: UBS expects global regulatory frameworks to gradually improve information disclosure and move toward greater fairness, though this is unlikely for U.S.-registered companies in the near term. Beyond regional regulatory shifts, multiple studies suggest that increasing diversity can close wealth gaps within societies, which, if true, should boost GDP over the next decade. The bank believes companies that promote diversity and equality across their value chains and processes can achieve long-term outperformance.

Primary drivers include increasing regulation, stricter stakeholder scrutiny (social-related shareholder proposals covering civil rights audits to pay inequality), growing evidence of the benefits of diversity, and the economic benefits of a more inclusive world. Recent legal challenges in some U.S. states regarding affirmative action pose short-term risks, as U.S. companies must balance the benefits of investing in their workforce with potential legal exposures. However, the bank remains confident in the long-term drivers.

Why Invest Now: This theme remains in the top five due to favorable valuation and quality scores, as well as alignment with the CIO’s core views. The theme is balanced across industries, offering a good style mix of defensive, value, and growth characteristics.

4. Family Businesses

Investment Logic: Family businesses span the globe, ranging from SMEs to well-known large-cap global listed companies. Market research suggests they account for two-thirds of all businesses worldwide, contributing over 70% of global GDP and providing 50–80% of jobs in many countries.

UBS estimates that family businesses represent 20–30% of global equity market capitalization. The bank believes the theme can continue to benefit from its relatively defensive positioning in terms of prudent balance sheets and capital discipline. These traits should help offset volatility from small-cap exposure. Following an economic downturn, the theme’s tilt toward small-caps provides good leverage for recovery.

Why Invest Now: This theme has high exposure to European markets, where UBS expects industrial activity to gradually exit a three-year slump in 2026. Similarly, the bias toward mid-and-small-cap companies tends to perform better as global economic trends recover—UBS forecasts the global economy will regain growth momentum starting in the second half of 2026. Furthermore, family businesses’ financial prudence offers relative quality and downside protection in volatile environments.

5. Searching for New Frontiers

Investment Logic: UBS believes emerging and frontier economies will be the key engines of global GDP growth over the next decade. Demographics are a major driver; the ten largest developing economies accounted for over 50% of the world’s population in 2024. The bank believes developing economies can outpace developed ones due to both demographic and productivity factors. UBS filters for markets that can better translate GDP growth into earnings growth, as a fast-growing economy does not always equate to a strong stock market.

Why Invest Now: UBS believes growing U.S. fiscal deficits and a weakening dollar are making emerging and frontier economies increasingly attractive. As investors seek to diversify away from U.S. assets, these markets provide compelling opportunities. Additionally, the Federal Reserve’s easing path should support risk assets.

Short-term Headwinds for Gene Therapy and Digital Health

UBS added that the Gene Therapy and Digital Health themes currently rank lower in its quantitative model and have less valuation appeal compared to other themes. Analysts have not identified any positive short-term catalysts to improve these rankings.

  • Gene Therapy: Companies in this space and the broader biotech industry face severe capital constraints. The fading of the 2021 biotech funding bubble has put pressure on early-stage, cash-burning firms. While improved liquidity is a positive signal, the overall operating environment has not fundamentally changed.
  • Digital Health: Following a period of gains, quantitative signals look less favorable. UBS believes the theme currently lacks strong positive drivers. Excessive capital in 2020–21 led to valuations based on high expectations for digital disruption rather than proven business models. Companies now face pressure to prove profitability and scalability amid tight financial conditions.

UBS noted that while AI applications in diagnostics and medical cost control have potential, they have yet to see scalable, data-driven applications become significant growth drivers in investable vehicles. The bank has adopted a more conservative allocation stance until financing conditions stabilize and execution risks decrease.