Tesla Is Supplying the Trucks. Nvidia Is Supplying the Compute. This $4 Stock Sits in the Middle

Tesla (TSLA) and Nvidia (NVDA) will invest $2.8B in Samsung Electro-Mechanics to expand production of advanced semiconductor substrates for AI chips, addressing a supply bottleneck. Nvidia will contribute $2.6B, and Tesla will invest $1.1B. These substrates are crucial for connecting AI processors to circuit boards, and their production is becoming increasingly challenging as AI systems grow in complexity.

Tesla's CFO reported that tariff refunds received in Q3 2026 were reinvested to expand U.S. production capacity, lifting the energy business gross margin to 33.1% from 20.4%. The refunds, along with warranty adjustments, drove the margin increase, but no specific refund amount was disclosed. The funds are being used for various hardware projects, including robotaxi, Optimus, solar, AI, and semiconductor manufacturing.

Nvidia's CEO Jensen Huang is proposing to use the company's GPUs as collateral for loans to unlock $500B in financing for AI infrastructure, according to The Motley Fool. Nvidia shares fell 4.5% on Thursday, while the Philadelphia Semiconductor Index dropped nearly 7%. Huang argues that Nvidia's chips retain value longer than typical hardware, citing rising rental prices for older H100 chips.

Tesla (TSLA) reduced its full-year and 2026 capex guidance to $20B. Q3 revenue was $28.05B, flat YoY, with a 56% drop in operating income to $718M. Automotive gross margin ex-credits was 18.1%. Over 75% of North American Q3 deliveries included paid FSD, with 1.7M+ global paid FSD customers. The company faces regulatory scrutiny over its Full Self-Driving system. Analysts raised price targets to $420 (Neutral) and $400 (Hold).

Tesla reported 1.74 million active FSD subscriptions in Q3 2026, up 67% YoY. Elon Musk claimed buyers prioritize FSD over the car, though data does not confirm this. The FSD attach rate reached over 75% in North America, a significant increase. Tesla's revenue was $28.05 billion, with $1.53 billion in free cash flow. The company's focus on software comes amid a challenging quarter for its core business.

AI video startup Higgsfield Inc. secured additional funding from Nvidia Corp. and TCV, adding to its $400M Series B round. The company, valued at $5.4B, has 40M registered users and aims to expand infrastructure and headcount. Nvidia CEO Jensen Huang highlighted advancements in AI video technology, noting improvements in coherence and storytelling.