Morgan Stanley analysts suggest that Tesla supercomputer Dojo , currently in production for training AI models for self-driving cars, could potentially increase the automaker’s market value by nearly $600 billion. They anticipate that Dojo’s capabilities could drive the adoption of robotaxis and expand Tesla’s software services.
Tesla supercomputer Dojo’s potential extends beyond selling vehicles at fixed prices. According to the analysts, it could create new markets beyond automotive. They envision scenarios where Dojo-enabled devices with real-time decision-making based on visual data become prevalent.
“Equal-weight” to “Overweight”
As a result of these insights, Morgan Stanley upgraded its recommendation on Tesla’s stock from “Equal-weight” to “Overweight,” designating it as their top pick, replacing Ferrari’s U.S.-listed shares. In premarket trading, Tesla’s shares saw a nearly 5.7% increase, reaching $262.63.
The brokerage also raised its 12-18 month target for Tesla’s shares by 60% to $400, the highest among Wall Street firms. This would translate to a market capitalization of approximately $1.39 trillion, compared to the current value of around $789 billion.
Adam Jonas, the lead analyst, foresees Dojo contributing the most value to Tesla in the realm of software and services. Morgan Stanley adjusted its revenue estimate for Tesla’s network services business to $335 billion by 2040, up from $157 billion previously. Jonas anticipates that this unit will represent over 60% of Tesla’s core earnings by 2040, nearly doubling its contribution from 2030. This growth is attributed to opportunities like third-party fleet licensing and increased average monthly revenue per user (ARPU).
Tesla’s 12-month forward price-to-earnings ratio stands at 57.9, significantly higher than U.S. legacy automakers Ford (6.31) and General Motors (4.56).
In summary, Morgan Stanley’s analysis highlights the transformative potential of Tesla’s Dojo supercomputer, which could reshape not only the automotive industry but also open up new avenues for software and services, driving substantial value for the company and its shareholders.