On September 11, Reuters reported that Tesla's supercomputer, Dojo, has the potential to give the electric vehicle maker a significant advantage in the market. According to Morgan Stanley analysts, Dojo could increase Tesla's market capitalization by approximately $600 billion, or 76%.
Tesla began production of Dojo in July and has allocated over $1 billion towards its development through next year. The supercomputer is designed to train AI models for autonomous vehicles, but its capabilities extend far beyond that. Morgan Stanley believes that Dojo can open up new markets beyond traditional vehicle sales.
Picture from: Sawyer Merritt
Adam Jonas, leading analyst at Morgan Stanley, stated that if Dojo can enable cars to "see" and "react," it could unlock opportunities in various industries. For instance, any device equipped with a camera that can make real-time decisions based on visual input could benefit from this technology.
As a result of their findings, Morgan Stanley upgraded their recommendation on Tesla's stock from "equal-weight" to "overweight," and named it their top pick, surpassing Ferrari's U.S.-listed shares. They also raised their 12–18-month target for Tesla's shares by 60% to $400, the highest among Wall Street brokerages, which would give the company a market capitalization of around $1.39 trillion.
Morgan Stanley's analysis suggests that Dojo will drive the most value in software and services. They increased their revenue estimate for Tesla's network services business to $335 billion by 2040, up from $157 billion previously. Jonas expects this unit to contribute over 60% of Tesla's core earnings by 2040, nearly doubling the estimated figure for 2030.
In summary, Morgan Stanley's analysis highlights the significant potential impact of Tesla's supercomputer, Dojo, on the company's market position and revenue streams. The firm's optimistic outlook has led them to upgrade their recommendation on Tesla's stock and set a high target price, reflecting their confidence in the company's future prospects.
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