Tesla & SpaceX's $16.8 Billion Terafab: 3 Chip Stocks Riding the Wave

Last Thursday, Tesla and SpaceX announced Terafab, a massive new chip factory in Texas backed by an initial $16.8 billion commitment.

But that $16.8 billion may be just the beginning.

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If all the planned phases get built, total spending could eventually reach $119 billion. We’re talking about a 100-million-square-foot complex designed to make, package, and test advanced chips all under one roof. Elon Musk has called it the “largest and most valuable building on Earth.”

There’s a reason they’re willing to spend that kind of money. Tesla wants millions of Optimus robots and fleets of self-driving Cybercabs. SpaceX is pursuing data centers in orbit. All of it requires a staggering amount of computing power and advanced chips.

And that’s where the opportunity comes in.

A buildout this big could create winners far beyond Tesla and SpaceX. Billions of dollars have to flow through the companies supplying the chips, servers, equipment, and infrastructure that make Terafab possible.

Those are the picks-and-shovels plays I’m interested in. So I dug into that supply chain and found three stocks positioned right in the path of all that spending.

These 3 stocks are poised to soar amid this multibillion-dollar buildout…

1. Lattice Semiconductor (LSCC): The Adaptable Chip Play

Lattice Semiconductor (LSCC) designs a special kind of chip called an FPGA. In plain English, that’s a chip you can reprogram after it’s already built.

That flexibility makes Lattice's chips useful inside data centers, factory robots, and edge devices, exactly the kinds of systems that could benefit from the massive expansion in computing infrastructure behind Terafab.

Remember what Tesla and SpaceX are building toward: robots, Cybercabs, and potentially orbital data centers. All of those applications require adaptable, specialized silicon.

The growth story here is not subtle.

Lattice's earnings are forecast to grow at more than 200% annually, roughly three times the pace of the broader U.S. market and far ahead of the semiconductor industry.

Wall Street has noticed. Eleven analysts cover the stock, and the consensus lands at Strong Buy. Several analysts covering Lattice also rank among the top performers for historical stock-picking results.

WallStreetZen's quantitative model tells a similar story. Lattice earns an A overall rating, placing it in the top 4% of roughly 4,600 stocks tracked.

The Component Grades reveal a stock with strength coming from several directions. Safety ranks in the top 15%, Sentiment and Momentum both rank in the top 8%, Financials lands in the top 7%, and Growth stands out in the top 4% of the entire market.

That’s the profile of a high-quality growth stock with real momentum behind it: strong fundamentals, bullish investor sentiment, and a business expanding faster than almost anything else in the market.

There is one catch: Lattice isn't cheap. Value grades around average, and after a one-year run of more than 100%, you're paying up for the growth.

But when earnings are forecast to grow at a triple-digit annual pace, a fast-rising share price may be chasing improving fundamentals rather than simply getting ahead of them.

2. Dell Technologies (DELL): The AI Infrastructure Heavyweight

Dell Technologies (DELL) probably isn't the first company that comes to mind when you think about the AI boom.

But this isn't the Dell you remember from buying a laptop.

Today, Dell is one of the biggest infrastructure suppliers of the AI buildout. When a hyperscaler or another enormous computing project needs racks of AI servers wired together and delivered at scale, Dell is one of the relatively few companies capable of doing it.

A fab like Terafab produces more chips. Dell builds and sells the servers those chips can eventually go into.

And the latest numbers show just how powerful that demand has become.

The last time Dell reported, earnings came in at more than three times the prior-year level. That's more than 200% year-over-year earnings growth in a single quarter from a company worth hundreds of billions of dollars.

Companies that size aren't supposed to grow earnings that quickly.

The stock has responded accordingly, nearly doubling over a three-month stretch. Naturally, that raises the question: Have you already missed it?

There are reasons to think the underlying opportunity could have more room to run.

Terafab is part of a much larger wave of AI infrastructure investment that continues to drive demand for servers and computing equipment. Dell also reports earnings again on September 3, giving investors another near-term look at whether that demand remains as strong as the recent numbers suggest.

Wall Street remains bullish. Eighteen analysts cover Dell, with the consensus landing at Strong Buy. The most bullish price target points to more than 50% potential upside from the level used in the original analysis.

WallStreetZen's model also gives Dell an A overall rating, placing it in the top 3% of stocks tracked.

Financials rank in the top 18%. Then things really take off: Sentiment ranks in the top 3%, Growth in the top 2%, and Momentum in the top 1% of the entire market.

When Growth, Sentiment, and Momentum all cluster near the top like that, you're looking at a stock where earnings, investor enthusiasm, and price action are all moving in the same direction.

The weak spot is Safety. Dell's recent move has been fast and powerful, which means you shouldn't necessarily expect a smooth ride.

Still, triple-digit recent earnings growth, elite momentum, bullish analyst sentiment, and another earnings report approaching make Dell one of the more intriguing heavyweight plays on continued AI infrastructure spending.

3. Kulicke & Soffa (KLIC): The Picks-and-Shovels Play

The final stock may be the most interesting of the three because Wall Street has barely discovered it.

Kulicke & Soffa (KLIC) doesn't make the chips. It makes essential equipment used to assemble semiconductors.

That makes it about as close to a classic picks-and-shovels play as you'll find in this story. When companies commit billions of dollars to expanding semiconductor production, Kulicke & Soffa sells some of the equipment the industry needs to turn those plans into actual chips.

The stock has already had an enormous run, climbing more than 160% over a one-year stretch. More recently, however, it pulled back by double digits.

That pullback appears less alarming when you look underneath the share price.

After an explosive run, KLIC came under pressure as investors took profits and semiconductor stocks broadly weakened. But the underlying business hasn't rolled over.

Its latest results beat expectations, and management followed with stronger-than-expected guidance.

The earnings trend is particularly interesting. Over four quarters, profits climbed from $0.28 per share to $1.20.

That's the kind of acceleration you want to see from a semiconductor-equipment company as investment in new chip capacity ramps up.

Then there’s the Wall Street angle.

Only one analyst currently covers the stock. That analyst ranks among the top performers tracked by WallStreetZen, carries a Buy recommendation, and sees more than 25% upside based on the price used in the original analysis.

Sparse coverage creates an interesting setup. If the business keeps performing and additional analysts eventually initiate coverage, more investors could begin paying attention to a company that has largely flown under Wall Street's radar.

WallStreetZen's quantitative model is already paying attention.

Kulicke & Soffa earns an A overall rating, with its fundamentals ranking in the top 1% of all stocks tracked.

Value ranks in the top 17%, Financials in the top 14%, Momentum in the top 10%, Sentiment in the top 9%, and Growth in the top 2%.

It also ranks as the number-one stock in the Semiconductor Equipment industry according to the model, ahead of more than 30 other companies in the group.

Safety is the softer spot, landing closer to average, so you should expect some volatility.

But the broader setup is compelling: strong growth, solid value, a recent pullback after a huge run, and an enormous semiconductor buildout arriving while Wall Street coverage remains remarkably thin.

That's the profile of an early discovery story.

The Bottom Line

Terafab starts with a $16.8 billion commitment, but the bigger story is where all that money could eventually flow.

Lattice Semiconductor offers exposure to the adaptable chips powering increasingly sophisticated computing systems. Dell supplies the AI servers and infrastructure needed to turn computing power into usable capacity. Kulicke & Soffa sells the semiconductor-assembly equipment that helps turn massive chip investments into actual production.

And if Terafab eventually approaches the scale laid out in its plans, the spending could climb far beyond that initial $16.8 billion.

That's why the most interesting way to approach a project like this may not be chasing the two famous names attached to it.

Sometimes the better opportunity is finding the companies selling the picks and shovels while everybody else rushes toward the gold.

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