Tesla’s Dojo Supercomputer Could Drive a $600B Surge in Market Value, Says Morgan Stanley
In exciting news for Tesla, the electric-car maker’s market value could soar by nearly $600 billion, thanks to its cutting-edge Dojo supercomputer. According to analysts at Morgan Stanley, this supercomputer has the potential to revolutionize Tesla’s foray into robotaxis and software services, prompting a significant increase in its market value. As a result, Tesla’s stock rallied by 6% following this announcement.
Having already established itself as the world’s most valuable automaker, Tesla began production of its Dojo supercomputer in July. With plans to invest over $1 billion in this groundbreaking technology, Tesla aims to employ Dojo to train artificial intelligence (AI) models for its self-driving cars. However, Morgan Stanley believes that Dojo has the power to unlock a range of new markets, extending well beyond the sale of vehicles.
Morgan Stanley analysts, led by Adam Jonas, stated that Dojo’s capability to make cars ‘see’ and ‘react’ has the potential to open up countless opportunities. They envision the supercomputer contributing to the development of devices equipped with cameras that make real-time decisions based on their visual field. This wide-ranging potential has led Morgan Stanley to upgrade Tesla’s stock to overweight from equal-weight, replacing Ferrari’s U.S.-listed shares as its top pick.
To reflect their optimism, Morgan Stanley raised its 12-18 month target on Tesla’s shares by a staggering 60% to $400, marking the highest projection among Wall Street brokerages. This target price would result in an estimated market capitalization of about $1.39 trillion for the electric vehicle (EV) giant. This figure represents a substantial increase of approximately 76% compared to Tesla’s current market value of $789 billion.
Monday’s market response was positive, with Tesla’s stock climbing around 5.7% to $262.70. Adam Jonas, the lead analyst at Morgan Stanley, predicts that Tesla’s Dojo supercomputer will provide the greatest value in software and services. As a result, Morgan Stanley adjusted its revenue estimate for Tesla’s network services business to $335 billion in 2040, up from the earlier projection of $157 billion. Jonas expects this unit to constitute more than 60% of Tesla’s core earnings by 2040, almost double the forecast for 2030.
While Tesla’s future prospects appear promising, it is worth noting that its 12-month forward price-to-earnings ratio of 57.9 is substantially higher than that of traditional automakers like Ford and General Motors. Ford’s ratio stands at 6.31, while General Motors’ is even lower at 4.56. These disparities highlight the market’s confidence in Tesla’s potential for growth and innovation in the coming years.
In conclusion, Tesla’s Dojo supercomputer has the potential to propel the company’s market value to new heights. With its applications in self-driving cars, software, and various other industries, Dojo could open up an array of opportunities for Tesla. The upgrade by Morgan Stanley and the significant increase in the target price showcases the bullish sentiment surrounding Tesla’s future prospects. As Tesla continues to push boundaries and invest in groundbreaking technology, the company’s market value is poised to soar, offering investors substantial returns in the years to come.