After a Morgan Stanley upgrade and upbeat note that predicted Tesla would sell AI technology to other automakers and save money by utilizing its own GPUs as much as possible rather than paying for chip supply from Nvidia, Tesla shares increased more than 10% on Monday.
Tesla should be seen as a tech business as well as an electric vehicle manufacturer, according to Morgan Stanley analysts. The company raised its earlier price prediction for Tesla stock from $250 to $400 as of Monday, highlighting the potential of the company’s Dojo supercomputer project and custom silicon. According to Morgan Stanley, Dojo has the potential to increase the company’s value by up to $500 billion over the long term.
By the end of 2024, according to Tesla’s CEO Elon Musk, the company will have invested more than $1 billion in Dojo. For its cars and budding robotics efforts, Tesla is building Dojo to aid in AI machine learning and computer vision training. In order to enhance the software it already has and create new features, Tesla, among other things, uses data and video from the cars of its customers.
Although Dojo is currently in its early stages of development, we think that its uses long-term can go beyond the car industry, wrote highly bullish Tesla analyst Adam Jonas in his report on Monday. Dojo is made to process visual input, laying the groundwork for vision-based AI models that can be used in robotics, healthcare, and security. In our opinion, once Tesla achieves advancements in software and autonomy, third-party Dojo services can provide investors with the next chapter of Tesla’s growth story.
Additionally, according to Morgan Stanley, Tesla will be able to bring in $2,160 per month from its customers who own cars in 2030 thanks to services made possible by Dojo and subscription software installed in cars. These services include self-driving systems, which Tesla does not currently offer, vehicle maintenance, software upgrades, content, and other services that will be developed in the future.
By the end of 2017, Elon Musk vowed, Tesla would successfully conduct a cross-country test without any assistance from humans. Only the most sophisticated driving assistance features are now available in Tesla vehicles, necessitating a human driver who is always on the ready to steer or brake.
In contrast, Deutsche Bank, another firm that is bullish on Tesla, noted risks to the EV manufacturer in Q3 from “planned summer production shutdowns that will push both production as well as deliveries down QoQ, discounts on inventories, as well as limited positive costs offsets in the quarter,” and set a price target at $300 in a note released on September 6.
Tesla dropped the cost of its electric vehicles earlier this quarter after officials warned investors on the business’s most recent earnings call that manufacturing and shipment volumes would probably fall short of the second quarter owing to scheduled factory closures.
Additionally, Tesla reduced the cost of its premium driver assistance system, known as Full Self-Driving or FSD in the US, from $15,000 to $12,000. Those price reductions and other factors have recently affected Tesla’s share price. However, following the Morgan Stanley note on Monday, shares of Tesla soared beyond $272 by midday.