Tesla‘s Dojo supercomputer could power a near USD 600 billion jump in the automaker’s market value by boosting the adoption of robotaxis and its software services, Morgan Stanley analysts said.
The electric-vehicle maker (EV) started production of the supercomputer used to train artificial intelligence (AI) models for self-driving cars in July and plans to spend more than USD 1 billion on Dojo through next year.
Dojo can open up new addressable markets that “extend well beyond selling vehicles at a fixed price,” Morgan Stanley analysts, led by Adam Jonas, said in a note on Sunday.
“If Dojo can help make cars ‘see’ and ‘react,’ what other markets could open up? Think of any device at the edge with a camera that makes real-time decisions based on its visual field.”
The Wall Street brokerage upgraded its recommendation on Tesla’s stock to “Overweight” from “Equal-weight” and made it their “top pick,” replacing Ferrari’s U.S.-listed shares .
Tesla shares were up nearly 5.7% at USD 262.63 in premarket trading.
Morgan Stanley raised its 12-18 month target on Tesla’s shares by 60% to USD 400 – the highest among Wall Street brokerages as per LSEG data – which, it estimated, would give the EV maker a market capitalization of about USD 1.39 trillion.
That compares with its current market value of about USD 789 billion, after the stock closed at USD 248.5 on Friday.
Jonas expects Dojo to drive the most value in software and services.
Morgan Stanley raised its revenue estimate from Tesla’s network services business to USD 335 billion in 2040, from USD 157 billion earlier.
Jonas expects the unit to account for more than 60% of Tesla’s core earnings by 2040, nearly doubling from 2030.
“This increase is largely driven by the emerging opportunity we see in third-party fleet licensing, increased ARPU (average monthly revenue per user).”
Tesla’s 12-month forward price-to-earnings ratio of 57.9 is well ahead of U.S. legacy automakers Ford at 6.31 and General Motors at 4.56.
