Motley Fool Money – The Newest Big Idea from Elon Musk: Terafab

Date: March 23, 2026
Host: John Quass
Analysts: Matt Frankel & Rachel Warren

Episode Overview

In this episode, the Motley Fool Hidden Gems team analyzes Elon Musk’s newly announced “Terrafab” project—a $25 billion joint venture aiming to revolutionize AI chip manufacturing. The analysts also put current geopolitical news impacting markets into long-term investing context and wrap up with their favorite secular growth trends for the next decade.

Key Topics & Insights

1. Market Movements — Iran Talks & Oil Prices

Timestamps: 00:00–08:55

• U.S. President Trump’s early morning announcement of "productive talks" with Iran resulted in a sharp market rally, especially in oil and energy stocks. However, Iran quickly denied that any such talks had taken place, highlighting significant uncertainty (01:15).
• Rachel Warren explains that the “five-day pause” only applies to strikes on Iranian power plants (“It's important to underscore here the situation is very fragile.” – Rachel, 03:51).
• Airline/cruise stocks benefited from plunging oil prices while energy companies like Occidental Petroleum slipped.

Notable Quote:

“Daily volatility is almost always noise. The market is reacting to fear and uncertainty rather than actual long-term damage to global businesses.”
— Rachel Warren, 07:09

• The team puts these headlines in context, reminding listeners to focus on long-term fundamentals and diversification rather than trying to time market whiplash.
• Matt: Points out why he generally avoids energy stocks because of inherent unpredictability and external risks (05:37).
• Rachel: Focuses on building “a robust, profitable portfolio rather than trying to predict the next chapter” and seeing volatility as opportunity for long-term investors (07:09).

2. Elon Musk’s Terrafab Announcement

Timestamps: 10:16–14:50

• What is Terrafab?
  Rachel introduces Terrafab as a $25 billion partnership between Tesla, SpaceX, and XAI. The goal: to create a vertically integrated, single-site semiconductor plant capable of producing one terawatt (a trillion watts) of AI compute power annually (10:36).

• Ambitions and Use Cases:

  • Control the entire chip manufacturing pipeline—design, lithography, fabrication, packaging.
  • Enable Musk companies’ big AI needs: powering robotaxis (Cybercab), Optimus humanoid robots, and especially a new generation of AI-powered orbital satellites for SpaceX (80% of Terrafab’s output) (11:24).
  • Leverage the vacuum of space for better chip thermal management and use abundant solar energy in orbit.

Notable Quote:

“Musk estimates that all current global chip makers combined can only provide about 2% of the compute capacity his companies will eventually require.”
— Rachel Warren, 11:10

• Host John Quass: Highlights the significance of “measuring AI compute by power” rather than by GPUs—emphasizing how enormous a “terawatt” is (13:10).

• Challenges and Skepticism:

  • Industry experts warn of the difficulty: “Chip fabrication is vastly more complex than building cars or rockets. It requires atomic-level precision that takes decades to master.” — Rachel (14:03)
  • Comparison to Tesla’s 4680 battery cell delays—Musk has “a history of... really aiming for the stars,” often achieving 80–90% of goals (12:18, Matt).

Memorable Moment:

“A single terawatt is about the total power capacity of the entire US grid.”
— Rachel Warren, 13:38

3. Investing Through Disruption: Long-Term Perspective

Timestamps: 04:37–08:55

• The panel stresses the importance of tuning out volatility and focusing on business fundamentals.
• Volatility is reframed as an opportunity for rebalancing and buying discounted shares in quality companies.

Notable Quote:

“Think of your portfolio like a house—a storm might shake the windows today, but if the foundation, which is hopefully a diversified mix of quality assets, is solid, the house should still be standing long after the weather clears.”
— Rachel Warren, 07:32

4. Favorite Long-Term Growth Trends

Timestamps: 16:15–19:49

• Why Focus on Secular Growth Trends?

  • Early investment in major trends (e.g., SaaS, e-commerce) delivered generational wealth, even if the opportunities were only obvious in hindsight.

• Matt’s Pick:

  • Quantum Computing: It’s still early, but IBM is the company he’s watching as a quantum play. Commercial viability is a decade away, “but by acknowledging and studying the trends today... we can set ourselves up to find tomorrow’s big winners.” ([16:43–18:54])

• Rachel’s Pick:

  • Physical AI: The merger of advanced AI and robotics—especially in healthcare through surgical robots and personalized medicine. She cites Intuitive Surgical, Medtronic, and Johnson & Johnson as leading companies building ecosystems around these innovations (18:54).

5. Memorable Quotes & Moments

• “He [Musk] gave the investing community plenty of buzz over the weekend.” — John Quass, 10:16
• “Terrafab is going to be a vertically integrated semiconductor factory designed to produce an unprecedented one terawatt... annually.” — Rachel Warren, 10:36
• “Amazon is spending $200 billion on CapEx this year... $25 billion isn’t exactly a massive bet in context.” — Matt Frankel, 12:18

Conclusion

This episode delivers a deep dive into Elon Musk’s shocking new Terrafab venture and frames dramatic market news in the context of long-term investing success. The Hidden Gems team reinforces the value of patience, diversification, and recognizing the difference between noise and genuine investing signals—ending with a focus on technological and economic megatrends that could define the next decade.

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