Tesla Surges as Analyst Forecasts $600 Billion Value Boost from Dojo

In an astonishing turn of events, Morgan Stanley boldly claimed that Tesla’s cutting-edge Dojo supercomputer has the potential to add nearly $600 billion to the electric vehicle giant’s market capitalization, which drove a significant 6% increase in the stock price on Monday.

The driving force behind this newfound optimism is The Dojo supercomputer’s capacity to accelerate Tesla’s expansion into the realms of autonomous robotaxis and software services.

Tesla, already holding the prestigious title of the world’s most valuable automaker, commenced the production of this groundbreaking supercomputer in July with the purpose of training artificial intelligence (AI) models specifically tailored for self-driving automobiles.

Their commitment to this endeavor is unwavering, with plans to allocate a staggering sum of over $1 billion toward the advancement of Dojo within the coming year.

Dojo’s powers have far-reaching effects that go beyond the realm of typical auto sales. According to a statement released on a peaceful Sunday by Morgan Stanley’s astute analysts, led by the venerable Adam Jonas, the supercomputer has the ability to open up new market opportunities that go beyond the simple sale of cars at set rates.

Jonas eloquently postulated, “If Dojo can empower vehicles with the ability to ‘perceive’ and ‘respond,’ one cannot help but ponder the multitude of prospects that may arise.

Contemplate any apparatus positioned at the periphery, equipped with a camera, and endowed with the ability to make instantaneous decisions predicated upon its visual sphere.”

In light of this promising outlook, the prestigious Wall Street brokerage firm upgraded Tesla’s stock rating from “equal-weight” to “overweight” while simultaneously anointing it as the preeminent choice, replacing Ferrari’s U.S.-listed shares.

Morgan Stanley’s bold confidence is made clear in the modification of their share price forecast for Tesla for the next 12 to 18 months, which results in an astonishing 60% rise to $400.

This forecast, unrivaled among Wall Street’s financial institutions, is estimated to confer upon the electric vehicle titan a market capitalization of approximately $1.39 trillion.

This projection overshadows Tesla’s prevailing market valuation, which is currently hovering around the $789 billion mark, based on Friday’s closing stock price of $248.5.

Consequently, Tesla’s stock exhibited robust performance on Monday, with an appreciable ascent of approximately 5.7%, settling at $262.70.

Jonas, with unswerving conviction, anticipates that the Dojo supercomputer will wield its greatest influence in the domains of software development and service provision.

It is Morgan Stanley’s belief that Tesla’s network services division will witness a remarkable surge, with revenue estimates for 2040 soaring to $335 billion, dwarfing the previous estimate of $157 billion.

Furthermore, according to Jonas, by the year 2040, this segment would provide more than 60% of Tesla’s core earnings. This is almost twice as much as what it contributed in the decade before.

This allegation was supported by Jonas, who said, “This remarkable upturn is primarily propelled by the burgeoning prospects we discern in third-party fleet licensing, as well as the augmented ARPU (average monthly revenue per user).”

According to valuation criteria, Tesla has a staggering 12-month forward price-to-earnings ratio of 57.9, which is much higher than conventional manufacturers like Ford (6.31) and General Motors (4.56), according to LSEG statistics.

Key Points

Tesla’s Stock Price Rises Noticeably: Following Morgan Stanley’s audacious forecast that the company’s market value may rise by as much as $600 billion because of the strength of the Dojo supercomputer, Tesla’s stock price rose noticeably by 6%.

The role of Tesla’s Dojo supercomputer: Tesla’s entrance into robotaxis and software services, expanding beyond conventional vehicle sales, is ready to undergo a revolution thanks to the company’s Dojo supercomputer, built to develop AI models for self-driving vehicles.

Unprecedented Investment: With plans to invest over $1 billion in the supercomputer project over the course of the upcoming year, Tesla’s commitment to Dojo is clear.

Novel business Opportunities: According to analysts, Dojo will open up new business vistas beyond the fixed-price sale of automobiles. They predict that equipment with real-time decision-making skills based on visual input will become available.

Wall Street Confidence: Morgan Stanley elevated Tesla’s stock to “overweight” and chose it as their top selection in place of Ferrari’s shares that are traded on the New York Stock Exchange.

Market Capitalization Forecast: Tesla’s market capitalization may soar to a mind-boggling $1.39 trillion, up 76% from its present $789 billion valuation, if Morgan Stanley achieves its target price of $400 per share over the next 12 to 18 months.

Dojo’s Impact on Software and Services: With revenue projections for Tesla’s network services business skyrocketing to $335 billion in 2040, analysts predict Dojo will have the largest impact on software development and services.

Over 60% of the company’s core earnings are anticipated to be accounted for by Tesla’s network services sector by 2040, roughly tripling its contribution since 2030.

Value Metrics: Tesla’s future price-to-earnings ratio of 57.9 greatly exceeds that of venerable manufacturers like Ford (6.31) and General Motors (4.56), demonstrating Wall Street’s faith in the pioneer of the electric car industry.

Read the full news: https://www.reuters.com/business/autos-transportation/tesla-supercomputer-could-boost-ev-makers-market-cap-by-600-bln-morgan-stanley-2023-09-11/

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