Morgan Stanley Predicts Tesla’s Worth Could Increase by Half a Trillion Dollars Thanks to Dojo
According to Morgan Stanley, Tesla Inc.’s Dojo supercomputer has the potential to increase the company’s market value by up to $500 billion by accelerating the adoption of robotaxis and network services.
Dojo could open up “new addressable markets,” just as AWS did for Amazon.com Inc., analysts led by Adam Jonas wrote in a note, lifting the stock from overweight to overweight and raising its 12-month price target. Street high $400 per share from $250.
Tesla shares, which have already more than doubled this year, rose as much as 8% on Monday. The stock’s market value increased by approximately 62 billion dollars. Morgan Stanley is one of Musk’s top advisory firms, including the $44 billion takeover of Twitter Inc., now known as X.
The supercomputer, designed to process massive amounts of data in practice-driving systems, could put Tesla at an “asymmetric advantage” in a market that could be worth $10 trillion, Jonas said, and could make software and services Tesla’s biggest value driver going forward. .
The next version of Tesla’s fully self-driving system, expected by the end of the year, and the company’s potential AI Day in 2024 are worth watching, he added. Tesla has not officially announced next year’s AI Day.
Tesla shares were down about 4.2% at the close after Jonas cut his recommendation to neutral in June, compared with a 2.1% gain for the S&P 500 and a 2.8% gain for the Nasdaq 100 over that period.
Jonas has previously made dramatic changes to his outlook on Tesla stock based on rising predictions about the company’s autonomous driving capabilities that have yet to materialize.
In August 2015, he raised his price target on the stock by 66% because of his view that Tesla will launch an app-based on-demand mobile service to compete with the likes of Uber Technologies Inc and Lyft Inc. Eight years later, Tesla has yet to introduce such a service, and the company markets features like Autopilot and Full Self-Driving that require constant driver supervision.
Tesla has mentioned how Dojo will give it an edge in AI and self-driving technology from at least 2021. In July of this year, CEO Elon Musk told investors that the automaker plans to invest more than $1 billion in the project by the end of 2024. .
“In 2022, Nvidia will spend $7 billion company-wide on research and development,” Deepwater Asset Management founder and CEO Gene Munster wrote in a note in July. “In other words, spending over $1 billion on a single product is aggressive and speaks to Musk’s urgency to make good on this FSD prediction.”
Meanwhile, Morgan Stanley’s base target would push the stock to a record high of $409.97 in November 2021. That makes the company a notable outlier: the average price target of analysts tracked by Bloomberg is $268.42.
“The more we looked at Dojo, the more we realized the potential for the stock to be undervalued,” Jonas said.
While most other analysts have yet to outline Dojo’s impact on the company, Seth Goldstein of Morningstar Research Services LLC says that “while it’s good for Elon to push the team as quickly as possible, the reality is that Tesla generally sees a delay from Elon’s original timelines.”
“That doesn’t mean they’re not making progress,” Goldstein said in a telephone interview Monday. “Once Dojo is ready and takes over software training, Tesla can update software faster and increase orders on software margins, which can be a big value-add.”
