In a whirlwind of excitement and anticipation, Tesla, the trailblazing electric car manufacturer, has surged ahead with a 6% rally in its stock price following a groundbreaking prediction by Morgan Stanley.
The financial giant’s analysts foresee Tesla’s Dojo supercomputer as the catalyst behind a staggering $600 billion boost to the company’s market value. This revolutionary development stems from Dojo’s potential to accelerate Tesla’s foray into the realms of robotaxis and software services.
Already renowned as the world’s most valuable automaker, Tesla’s journey into the future took a significant leap when it initiated production of the Dojo supercomputer in July. With plans to invest over $1 billion into Dojo through the coming year, Tesla is setting the stage for a transformative shift in its business model.
Morgan Stanley’s team of analysts, led by the insightful Adam Jonas, articulated their belief in Dojo’s capacity to open new addressable markets that transcend the conventional notion of selling vehicles at a fixed price.
As Jonas puts it, “If Dojo can help make cars ‘see’ and ‘react,’ what other markets could open up? Think of any device at the edge with a camera that makes real-time decisions based on its visual field.”
The pivotal role of Dojo in Tesla’s grand vision has prompted Morgan Stanley to upgrade Tesla’s stock rating from “equal-weight” to “overweight,” dethroning Ferrari’s U.S.-listed shares as their “top pick.” This bold move signifies the immense confidence that Morgan Stanley places in Tesla’s future prospects.
Furthermore, Morgan Stanley has raised its 12-18 month target price for Tesla’s shares by an impressive 60%, setting it at $400, which, according to LSEG data, stands as the loftiest projection among all Wall Street brokerages.
Such a target would catapult Tesla’s market capitalization to an astonishing $1.39 trillion, a staggering 76% surge from its current value of approximately $789 billion, based on the stock’s closing price of $248.5 on the preceding Friday.
The stock swiftly responded to this optimistic forecast, climbing approximately 5.7% to reach $262.70 on the very next trading day.
However, the spotlight isn’t just on Tesla’s soaring market value but also on the profound impact that Dojo is anticipated to have, particularly in the domains of software and services. Morgan Stanley’s Adam Jonas, the man behind these bold predictions, foresees Dojo driving the most significant value in these areas.
To put this into perspective, Morgan Stanley has revised its revenue estimate for Tesla’s network services business to a staggering $335 billion by the year 2040. This figure marks a substantial increase from the earlier estimate of $157 billion.
The rationale behind this bullish projection centers on the emerging opportunity that Morgan Stanley perceives in third-party fleet licensing and the potential for increased Average Revenue Per User (ARPU).
Intriguingly, Jonas envisions that this unit will account for over 60% of Tesla’s core earnings by the year 2040, nearly doubling its share from 2030. Such a seismic shift signifies not just Tesla’s expansion but also its dominance in the software and services sector of the automotive industry.
One cannot help but notice the stark contrast in valuation metrics when comparing Tesla to traditional legacy automakers. Tesla’s 12-month forward Price-to-Earnings (P/E) ratio stands at a commanding 57.9, a stark contrast to Ford’s 6.31 and General Motors’ 4.56, according to data from the London Stock Exchange Group (LSEG).
This divergence highlights the remarkable confidence that investors and analysts place in Tesla’s future growth prospects, underpinned by the transformative potential of Dojo.
In conclusion, Tesla’s Dojo supercomputer is poised to be a game-changer in the electric vehicle industry, with Morgan Stanley’s audacious prediction of a $600 billion surge in market value.
Dojo’s ability to accelerate Tesla’s expansion into robotaxis and software services has not only earned the company an “overweight” rating from Morgan Stanley but has also positioned it as the firm’s “top pick.” The revised target price of $400, the highest among Wall Street analysts, signals the immense optimism surrounding Tesla’s future.
Moreover, the pivotal role that Dojo is set to play in Tesla’s software and services segment cannot be underestimated.
With a forecasted revenue of $335 billion by 2040 and the potential to account for over 60% of Tesla’s core earnings, the software and services arm is on track to redefine the company’s financial landscape.
While Tesla’s lofty valuation metrics have raised eyebrows, they underscore the market’s unwavering belief in the company’s potential and the transformative power of Dojo.
As Tesla accelerates toward the future, the automotive industry will undoubtedly witness a seismic shift, with Tesla leading the charge into uncharted territory.