In a whirlwind of excitement for Tesla enthusiasts and investors, the electric vehicle giant’s shares surged by more than 10% on a single Monday following a significant upgrade from Morgan Stanley. The upgrade brought with it an optimistic vision of Tesla’s future: selling cutting-edge AI technology to fellow automakers and cost savings by relying on its custom GPUs instead of purchasing chips from Nvidia.
Morgan Stanley analysts have put forth a compelling argument, suggesting that Tesla should be viewed not just as an electric car manufacturer but as a technology company in its own right. The firm’s newfound optimism has translated into a bold new price target of $400 per share for Tesla, a substantial leap from its previous target of $250. This remarkable shift in valuation underscores the tremendous potential of Tesla’s Dojo supercomputer project and its custom silicon offerings. According to Morgan Stanley, Dojo alone could theoretically contribute an astonishing $500 billion to the company’s long-term value.
Tesla CEO Elon Musk had previously revealed the company’s ambitious plan to allocate over $1 billion to the development of Dojo by the end of 2024. The primary purpose of Dojo is to facilitate AI machine learning and computer vision training for Tesla’s vehicles and emerging robotic ventures. Among its many applications, Tesla utilizes video clips and data from customer vehicles to enhance existing software and create innovative features.
Adam Jonas, an exceptionally bullish analyst on Tesla, highlighted in his note, “Although Dojo is still in the early stages of development, we believe its long-term applications could extend far beyond the automotive industry. Dojo’s core function is processing visual data, which serves as the foundation for vision-based AI models applicable in fields such as robotics, healthcare, and security. We envision that once Tesla achieves breakthroughs in autonomy and software, third-party Dojo services could present the next phase of Tesla’s growth story for investors.”
Moreover, Morgan Stanley anticipates that Tesla will have the capability to generate an impressive $2,160 in recurring monthly revenue from vehicle owners by 2030. This revenue will result from services facilitated by Dojo and subscription-based software in Tesla vehicles, including self-driving systems (currently not offered), vehicle charging services, maintenance, software upgrades, content, and yet-to-be-developed offerings.
It’s worth noting that Tesla’s promise of a fully self-driving cross-country demo without human intervention by the end of 2017 remains unfulfilled. The company currently offers advanced driver assistance systems that necessitate a human driver ready to take control at any moment.
In contrast, Deutsche Bank, another firm with a bullish outlook on Tesla, has cautioned about potential risks for the electric vehicle manufacturer in the third quarter. These risks include planned summer production shutdowns, which are expected to impact both production and deliveries. Deutsche Bank has set a price target of $300 in light of these factors.
Earlier in the quarter, Tesla implemented price reductions for its electric vehicles, a move that followed warnings from company executives about the likelihood of lower production and delivery volumes in the third quarter due to planned factory closures. Tesla also reduced the price of its premium driver assistance system, known in the U.S. as Full Self-Driving (FSD), from $15,000 to $12,000. These price adjustments had previously weighed on Tesla’s share price. However, following the Morgan Stanley upgrade, Tesla shares saw a remarkable mid-day spike, surging above $272.
The electrifying optimism surrounding Tesla’s AI technology and its transformative potential in the automotive and tech industries has ignited investor interest and rekindled excitement about the company’s future prospects. As Tesla continues to push the boundaries of innovation, its journey in the world of technology and electric vehicles promises to be nothing short of remarkable.
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