By encouraging the deployment of robotaxis and its software services, Tesla’s (TSLA.O) Dojo supercomputer could propel a spike in the market value of the automaker of up to $600 billion, according to Morgan Stanley analysts.
The manufacturer of electric vehicles (EV) began production of the Dojo supercomputer in July and expects to spend over $1 billion on it over the course of the following year. Dojo is used to train artificial intelligence (AI) models for self-driving cars.
Dojo potentially opens up new addressable markets that “extend well beyond selling vehicles at a fixed price,” according to a note published on Sunday by Morgan Stanley analysts led by Adam Jonas.
What additional markets might emerge if Dojo is successful in making cars see’ and react,’ I wondered. Consider any edge gadget that has a camera and makes judgments in real time based on what it sees.
The Wall Street brokerage replaced Ferrari’s U.S.-listed shares with Tesla’s stock as their “top pick,” upgrading their recommendation on it from “Equal-weight” to “Overweight”.
In premarket trade, Tesla shares were up about 5.7% to $262.63.
According to LSEG data, Morgan Stanley increased its 12- to 18-month price target on Tesla’s shares by 60% to $400, making it the highest among Wall Street brokerages. At that price, according to Morgan Stanley’s estimates, the EV manufacturer would have a market capitalization of almost $1.39 trillion.
After the stock price reached a close of $248.5 on Friday, the market worth of the company was estimated to be at $789 billion.
Jonas anticipates Dojo to be the program and service that adds the most value.
Morgan Stanley increased its forecast for network services revenue from $157 billion to $335 billion by 2040.
By 2040, nearly doubling from 2030, Jonas projects the segment to provide more than 60% of Tesla’s core earnings.
This growth is mostly attributable to the expanding market for third-party fleet licensing and the rising ARPU (average monthly revenue per user).
Ford (F.N), which has a 12-month forward price-to-earnings ratio of 6.31, and General Motors (GM.N), which has a ratio of 4.56, are both well behind Tesla, which has a ratio of 57.9.