London
Tesla’s development of the Dojo supercomputer has garnered the attention of Morgan Stanley analysts, who believe it could potentially increase the automaker’s market value by nearly $600 billion. Dojo is designed to train artificial intelligence models for self-driving cars, and Tesla began production of the supercomputer in July. The company plans to invest over $1 billion in Dojo over the next year. According to Morgan Stanley analysts, Dojo has the potential to expand Tesla’s addressable markets well beyond vehicle sales.
The analysts suggest that Dojo’s capabilities in helping cars see and react could open up new markets, especially for devices equipped with cameras that make real-time decisions based on visual information. They upgraded Tesla’s stock rating from equal-weight to overweight and made it their top pick, replacing Ferrari’s U.S.-listed shares.
Morgan Stanley also raised its target price for Tesla’s shares by 60% to $400, which would give the electric vehicle maker a market capitalization of approximately $1.39 trillion, a significant increase from its current market value of about $789 billion. The analysts anticipate that Dojo will provide the most value in software and services, contributing to Tesla’s network services business revenue, which they estimate will reach $335 billion by 2040, up from their previous estimate of $157 billion.
The potential for third-party fleet licensing and increased average monthly revenue per user could significantly boost Tesla’s core earnings, accounting for over 60% of earnings by 2040. Tesla’s stock price surged by about 6% in premarket trading following the news of the analysts’ upgrades and price target increase.
