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Tesla Jumps as Analyst Predicts $600 Bn Value Boost from Dojo

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In the ever-evolving world of technology and innovation, Tesla Inc. has once again taken a giant leap forward. On September 11, 2023, the electric car manufacturer saw a remarkable 6% surge in its stock price, thanks to an exciting revelation by Morgan Stanley. The global financial services firm announced that Tesla’s Dojo supercomputer could potentially propel the company’s market value by a staggering $600 billion. This optimistic outlook is based on Dojo’s capacity to accelerate Tesla’s foray into robotaxis and software services, opening up new horizons for the automotive giant.

The Power of Dojo

Tesla’s Dojo supercomputer has been a subject of considerable intrigue in recent times. The company commenced production of this cutting-edge machine in July with a clear objective in mind: to train artificial intelligence (AI) models for self-driving cars. What sets Dojo apart is its potential to revolutionize the autonomous driving landscape, making cars smarter and more responsive.

A Billion-Dollar Investment

To realize the full potential of Dojo, Tesla is committed to investing over $1 billion in this project throughout the coming year. This substantial financial commitment underscores Tesla’s dedication to advancing AI technology, further solidifying its position as an industry leader.

Expanding Addressable Markets

Morgan Stanley’s analysts, led by the renowned Adam Jonas, assert that Dojo’s impact extends far beyond the realm of selling vehicles at fixed prices. They pose a thought-provoking question: “If Dojo can help make cars ‘see’ and ‘react,’ what other markets could open up?” The possibilities are vast, encompassing any device equipped with a camera that can make real-time decisions based on its visual field.

A Bold Upgrade

In light of these promising developments, Morgan Stanley has taken a bold step by upgrading Tesla’s stock from “equal-weight” to “overweight.” This move signifies the firm’s unwavering confidence in Tesla’s future prospects. Notably, Morgan Stanley has replaced Ferrari’s U.S.-listed shares with Tesla as its “top pick” in the market.

A Rosy Outlook

The most striking prediction by Morgan Stanley is the significant increase in Tesla’s market capitalization. The firm has raised its 12-18 month target on Tesla’s shares by a remarkable 60%, setting it at $400 per share. If this target is achieved, it would propel Tesla’s market capitalization to approximately $1.39 trillion. This represents a staggering 76% increase from Tesla’s current market value, which stands at approximately $789 billion.

The Stock Surge

The impact of Morgan Stanley’s positive assessment was immediately visible in the stock market. Tesla’s stock price soared by about 5.7% on the day of the announcement, reaching $262.70. This impressive surge reflects the investor community’s enthusiasm for Tesla’s future prospects, driven by the transformative potential of Dojo.

The Role of Dojo in Software and Services

Morgan Stanley’s analysts believe that the real value of Dojo lies in its potential impact on software and services. The firm has substantially increased its revenue estimate for Tesla’s network services business, projecting it to reach $335 billion by 2040, up from the previous estimate of $157 billion.

A Transformational Opportunity

According to Adam Jonas, the head of Morgan Stanley’s analysis team, the network services business is poised to become a driving force behind Tesla’s core earnings. Jonas anticipates that by 2040, it could account for more than 60% of Tesla’s core earnings, nearly doubling from the 2030 figure. This transformation is attributed to emerging opportunities in third-party fleet licensing and increased average monthly revenue per user (ARPU).

Market Comparisons

To put Tesla’s meteoric rise into perspective, it’s essential to consider its valuation in comparison to traditional automakers. Tesla’s 12-month forward price-to-earnings ratio currently stands at 57.9, significantly outpacing legacy automakers such as Ford at 6.31 and General Motors at 4.56, according to data from the London Stock Exchange Group (LSEG). In conclusion, Tesla’s future looks incredibly promising, driven by the remarkable capabilities of its Dojo supercomputer. Morgan Stanley’s optimistic outlook and upgraded stock rating underline the transformative potential of Dojo in expanding Tesla’s market value. As the automotive industry continues to evolve, Tesla stands at the forefront of innovation, poised for significant growth in the years to come.
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