Tesla, the electric car maker, experienced a surge in its shares by over 10% following an upgrade from Morgan Stanley. The investment firm’s optimistic note highlighted the potential for Tesla to sell its AI technology to other automakers. Furthermore, Morgan Stanley emphasized the company’s ability to save costs by utilizing its own GPUs instead of relying on chip supply from Nvidia. The analysts argued that Tesla should be viewed as a tech company rather than solely an electric vehicle manufacturer. As a result, Morgan Stanley set a new price target of $400 per share, signaling its confidence in Tesla’s future prospects.
Morgan Stanley’s bullish outlook for Tesla was heavily influenced by the company’s Dojo supercomputer project and its use of custom silicon. The firm believes that the development of Dojo has the potential to increase Tesla’s value by up to $500 billion in the long-term. Tesla plans to invest over $1 billion in Dojo by the end of 2024 to enhance its capabilities in AI machine learning and computer vision training. The Dojo project serves various purposes for Tesla, including utilizing video clips and data from customer vehicles to improve existing software and develop new features.
Adam Jonas, a highly bullish analyst on Tesla, stated that Dojo’s applications extend beyond the auto industry. With its focus on processing visual data, Dojo can pave the way for vision-based AI models such as robotics, healthcare, and security. The development of Dojo, combined with Tesla’s advancements in autonomy and software, could open doors for third-party Dojo services and further contribute to Tesla’s growth story. This potential expansion into other industries adds another layer of attractiveness to Tesla’s overall proposition.
Morgan Stanley also predicts that Tesla could generate $2,160 in recurring revenue per month from its vehicle owners by 2030. This revenue would come from various services enabled by Dojo and subscription software, including self-driving systems, vehicle charging services, maintenance, software upgrades, and content. Tesla currently does not offer self-driving capabilities in its vehicles, but the firm expects this to change in the future. These additional revenue streams, facilitated by the integration of Dojo, present an opportunity for Tesla to further monetize its customer base.
While Morgan Stanley expresses optimism, Deutsche Bank highlights potential risks for Tesla in the third quarter. These risks include planned summer production shutdowns, which would likely result in a decline in production and deliveries compared to the second quarter. The investment bank also mentions the impact of discounts on inventories and limited positive cost offsets during the quarter. As a result, Deutsche Bank sets a price target of $300 per share, acknowledging the challenges Tesla may face in the near term.
Earlier this quarter, Tesla reduced the prices of its electric vehicles and its premium driver assistance system, known as Full Self-Driving (FSD). The price cut for FSD from $15,000 to $12,000, coupled with other factors, had weighed on Tesla’s share price in recent weeks. However, the surge in Tesla’s shares following Morgan Stanley’s optimistic note suggests that investors are still confident in the long-term prospects of the company.
Tesla’s shares experienced a significant boost based on an optimistic outlook presented by Morgan Stanley. The firm’s belief in Tesla’s potential as a tech company, the value of its Dojo supercomputer project, and the revenue possibilities from Dojo-enabled services have positively influenced investor sentiment. While risks and challenges remain, Tesla’s innovative approach to electric vehicles and AI technology continues to capture the interest of analysts and investors alike.