In a surprising turn of events, Tesla shares experienced a significant increase of 10% in the first half of trading on Monday. This sudden surge came as a result of a Morgan Stanley upgrade and an optimistic note that shed light on Tesla’s potential in the AI technology market. The upgrade came with a new price target of $400 for Tesla shares, emphasizing the company’s groundbreaking Dojo supercomputer project and custom silicon. This new outlook has the potential to add an impressive $500 billion to Tesla’s value in the long term.
Morgan Stanley analysts argue that Tesla should be perceived not just as an electric car manufacturer but as a tech company. This perspective highlights the value and potential of Tesla’s Dojo supercomputer project, which is specifically designed to assist with AI machine learning and computer vision training for its vehicles and budding robotics initiative. By utilizing video clips and data collected from Tesla owners, the company continuously improves its software and develops innovative features. This blending of technology and automotive prowess positions Tesla for growth beyond the auto industry.
The optimistic note by highly bullish Tesla analyst Adam Jonas acknowledges Dojo’s early-stage development but envisions the supercomputer’s potential applications in various industries. Jonas believes that Dojo, with its ability to process visual data, lays the foundation for vision-based AI models such as robotics, healthcare, and security. Should Tesla make significant progress in autonomy and software, third-party Dojo services could become an essential aspect of Tesla’s growth story. This expansion into new areas of technology can further increase Tesla’s value and solidify its position as a tech innovator.
A New Source of Revenue
Morgan Stanley forecasts that Tesla has the potential to generate $2,160 in recurring revenue per month from its vehicle owners by 2030. This revenue would come from services enabled by Dojo and subscription-based software integrated into Tesla vehicles. Currently, Tesla does not offer self-driving systems, vehicle charging services, maintenance, software upgrades, content, and other services that could be developed in the future. By tapping into these avenues, Tesla can create additional revenue streams and enhance its profitability.
Risks and Challenges
While Morgan Stanley’s upgrade and optimistic outlook have sparked a positive response in the market, other analysts remain cautious. Deutsche Bank, another firm bullish on Tesla, points out some potential risks for the company in the third quarter. These risks include planned production shutdowns, resulting in reduced production and deliveries, discounts on inventories, and limited positive costs offsets. However, with the focus on expanding its AI technology and software services, Tesla aims to overcome these hurdles and maintain its growth trajectory.
The recent surge in Tesla shares following the Morgan Stanley upgrade and optimistic note showcases the market’s enthusiasm for the company’s innovative initiatives. Tesla’s Dojo supercomputer project and custom silicon present tremendous potential for growth, positioning the company not only as a leading electric car manufacturer but also as a tech pioneer. With the anticipation of new revenue streams and expanding applications for Dojo, Tesla’s future looks promising. However, it must overcome challenges and risks to fully realize its potential as a technology-driven disruptor in the automotive industry.