Tesla Stock Rebounds After AI Selloff. Why the Fears Didn’t Make Sense.

Tesla’s Fremont, Calif., plant. At the close on Thursday, shares of the electric vehicle maker were up almost 20% year to date. (Getty Images)

Key Points

• Tesla stock increased early Thursday, following a 4.6% drop on Wednesday amid an AI selloff.
• Wednesday’s decline occurred after Tesla shares reached a record high of $495.28 earlier in the day.
• Despite the recent volatility, Tesla stock has shown a 16% increase this year.

Tesla stock bounced back after a difficult Wednesday.

Shares of the electric-vehicle maker gained 3.5% on Thursday, closing at $483.27, while the S&P 500 and Dow Jones Industrial Average rose 0.8% and 0.1%, respectively.

Tesla stock got caught in the AI selloff on Wednesday, dropping 4.6% after hitting a record high earlier in the day. Shares traded at $495.28 for the first time.

Nvidia stock dropped 3.8% and shares of power-generation equipment provider GE Vernova plunged 11% after an AI chip start-up, Mythic, raised $125 million. Mythic is trying to design AI chips that solve “the biggest problem of AI—its insatiable, ruinous energy consumption,” according to the company.

In theory, lower energy consumption means fewer business opportunities for GE Vernova. And high-quality, low-cost AI chips from a start-up could eat away at Nvidia’s market share and profit margins.

Tesla is a user of AI computing, so lower power consumption would be a benefit to its efforts to create AI-trained machines. Still, most AI-related stocks fell on Wednesday. Investors didn’t stop to ask questions.

Nvidia and GE Vernova shares rose 1.9% and 4.1%, respectively, on Thursday.

Thursday’s gain leaves Tesla’s stock up almost 20% this year.

Write to Al Root at allen.root@dowjones.com