According to analysts at Morgan Stanley, Tesla’s Dojo supercomputer has the potential to significantly increase the automaker’s market value by approximately $600 billion. The company’s software services and the rapid adoption of robotaxis would be responsible for this increase.
The electric vehicle manufacturer has commenced the production of a supercomputer designed for training artificial intelligence models utilized in autonomous vehicles. This initiative, known as Dojo, is projected to receive an investment exceeding $1 billion throughout the upcoming year.
Dojo has the potential to access new markets that go beyond the conventional model of selling vehicles at a fixed price, according to a note by Morgan Stanley analysts under the leadership of Adam Jonas.
If Dojo has the capability to enhance the visual perception and response of automobiles, what other potential markets could potentially emerge as a result?
The brokerage firm on Wall Street has revised its recommendation for Tesla’s stock, upgrading it from “Equal-weight” to “Overweight.” Additionally, they have designated Tesla as their new “top pick,” replacing the U.S.-listed shares of Ferrari.
The premarket trading of Tesla shares showed a significant increase of approximately 5.7%, reaching a value of $262.63.
Morgan Stanley has increased its 12- to 18-month target for Tesla’s shares by 60% to $400, according to data from LSEG. This adjustment represents the highest target among Wall Street brokerages. Morgan Stanley estimates that achieving this target would result in an approximate market capitalization of $1.39 trillion for the electric vehicle manufacturer.
This is in comparison to its present market value of approximately $789 billion, following the closing of the stock at $248.5 on Friday.
Jonas anticipates that Dojo will provide the highest level of value in terms of software and services.
Additionally, Morgan Stanley has revised its revenue estimate for Tesla’s network services business to $335 billion in 2040, up from the previous estimate of $157 billion.
According to Jonas, it is anticipated that the unit will contribute to over 60% of Tesla’s core earnings by 2040, representing a nearly twofold increase from 2030.
The primary factor contributing to this growth is the promising potential we have identified in third-party fleet licensing, as well as the rise in ARPU (average monthly revenue per user).
Tesla’s 12-month forward price-to-earnings ratio of 57.9 significantly surpasses that of U.S. legacy automakers Ford (F.N) at 6.31 and General Motors (GM.N) at 4.56.