Tesla’s Market Cap Set to Soar with Introduction of Dojo Supercomputer, Says Morgan Stanley
In a recent analysis conducted by Morgan Stanley, experts are predicting a monumental increase in Tesla’s market capitalization. This surge is expected to be driven primarily by the introduction of the Dojo supercomputer, as well as the company’s focus on robotaxis and software services.
Tesla launched the production phase of the Dojo supercomputer in July, with the goal of using it to train artificial intelligence (AI) models for the development of autonomous vehicles. This cutting-edge technology represents a significant investment for Tesla, with over $1 billion allocated to the Dojo project in the coming year.
According to Adam Jonas, a researcher at Morgan Stanley, the potential reach of Dojo extends well beyond the automotive industry. He speculates that if the supercomputer can help cars see and react, it opens up a wide range of possibilities for other markets. For example, devices equipped with cameras could make real-time determinations based on visual inputs, revolutionizing numerous industries.
As a result of this exciting development, Morgan Stanley has upgraded its rating of Tesla stocks from Equal-weight to Overweight, and has named it their top pick. This new rating replaces the previous distinction bestowed upon U.S.-listed shares of Ferrari.
The positive news has caused Tesla’s shares to show an upward trend, increasing nearly 5.7% to $262.63 before the market opened. Morgan Stanley’s endorsement has also led to a significant increase in the 12-18 month target price for Tesla’s shares, now positioned at $400. According to data from LSEG, this valuation would push Tesla’s market cap to an estimated $1.39 trillion, a considerable leap from its current valuation of $789 billion.
Adam Jonas remains optimistic about the Dojo project, believing it will be a cornerstone in driving value, particularly in the software and services segment. Morgan Stanley has revised its revenue predictions for Tesla’s network services sector, estimating it to reach $335 billion by 2040, compared to the previous projection of $157 billion. Jonas predicts that by 2040, this unit will account for over 60% of Tesla’s core earnings, nearly double the projection for 2030.
Tesla continues to outpace traditional U.S. automakers like Ford and General Motors in terms of its financial performance. It currently boasts a 12-month forward price-to-earnings ratio of 57.9, while Ford and General Motors stand at 6.31 and 4.56, respectively.
The introduction of the Dojo supercomputer is undoubtedly a significant development for Tesla, with the potential to revolutionize not only the automotive industry but also various other sectors. With the backing of Morgan Stanley and the projected increase in market capitalization, Tesla’s future looks brighter than ever. Investors and enthusiasts alike eagerly await the impact of the Dojo supercomputer and its role in shaping Tesla’s success.
