Investors began paying more attention to artificial intelligence (AI) chip stocks after the recent earnings report from Nvidia. The company's stock surged 25% as the company cemented its lead in the AI chip space. Consequently, its market cap has risen to the $1 trillion range.

Nonetheless, the focus on Nvidia could distract investors from a key opportunity in Tesla (TSLA 12.06%). Indeed, Nvidia also has developed technology in the automotive space. But if autonomous driving takes off, Tesla could not only dominate an essential segment in AI but also become the largest semiconductor stock. 

Tesla as a chip stock

Admittedly, referring to Tesla as a chip stock may appear baffling. Given its success in electric vehicles and battery technology, Tesla looks like an electric car stock or, more broadly, an industrial stock.

But while those descriptions fits today's Tesla, it could become less accurate over time. Tesla has begun to advance its AI capabilities by developing its own chips.

One is the Dojo chip, which powers Tesla's Dojo system -- a supercomputer that performs computer vision video processing. It employs machine-learning tools to bolster Autopilot, Tesla's advanced driver-assistance system.

Tesla has also developed an FSD, or full self-driving chip. With this chip, Tesla intends to maximize silicon performance. This will verify functionality and performance while communicating with drivers to help them to program the chip. Tesla expects this approach will offer the performance optimization and redundancy needed to drive Tesla's vehicles autonomously.

How its chip technology changes the face of Tesla

For now, Tesla's chips amount to a supporting element for its automotive business. This includes Autopilot, which can help with lane changes and parking. They also can support the "full self-driving capability" that slows cars as they approach stop signs and can parallel park a vehicle.

However, the eventual goal is to develop fully functional robotaxi platforms, presumably powered by the FSD and Dojo chips. In a CNBC interview, CEO Elon Musk said that Tesla could convert its cars to robotaxis simply by adding its self-driving software. This gives it an advantage over Nvidia and other competitors that do not make automobiles.

Moreover, research by Cathie Wood's Ark Invest suggests this technology will dramatically increase profitability. In 2022, Tesla reported a gross margin of 29%. Wood's team estimates the margin for the self-driving platform will come in as high as 80%. If Ark Invest is correct, that would likely mean that Tesla would generate most of its profits from the robotaxi platform.

Wood also believes that profit growth could take Tesla's stock price to $2,000 per share by 2027. That would amount to an approximate $6 trillion market cap for Tesla, well above its current market cap of $630 billion. That is more than double Apple's market cap, which is the largest in the world at $2.8 trillion.

Tesla's tech transformation

Success with robotaxis could transform Tesla into more of a semiconductor stock. Thanks to the FSD and Dojo chips, Tesla holds the potential to lead the emerging robotaxi industries, driving massively higher gross margins that could power nearly 10-fold growth in the stock over four years.

Admittedly, predicting financials and stock price growth several years into the future is difficult, and it remains unclear how well the technology will perform after mass adoption. But if robotaxis succeed, Tesla will present a formidable challenge to Nvidia and the chip sector at large.