On Monday, Tesla stock soared more than 10% following a Morgan Stanley upgrade and an upbeat note in which Tesla envisioned selling AI technology to other automakers and saving money by utilizing its own GPUs as much as possible rather than paying for chip supply from Nvidia.
According to Morgan Stanley analysts, Tesla should be seen as a technology firm as well as an electric vehicle manufacturer. The company raised its price objective for Tesla shares to $400, up from $250 previously, on Monday, citing the potential of Tesla’s Dojo supercomputer project and custom silicon. Morgan Stanley estimates Dojo may contribute up to $500 billion to the company’s worth over time.
Elon Musk, Tesla’s CEO, stated in July of this year that the company expected to spend more than $1 billion on Dojo by the end of 2024. Dojo is being developed by Tesla to aid with AI machine learning and computer vision training for its automobiles and embryonic robotics endeavour. Tesla utilizes video footage and data from its customers’ vehicles, among other things, to enhance existing software and develop new features.
“Although Dojo is still early in its development, we believe that its applications long-term can extend beyond the auto industry,” very positive Tesla analyst Adam Jonas said in a note on Monday. Dojo is intended to interpret visual input, laying the groundwork for vision-based AI models in fields such as robotics, healthcare, and security. Third-party Dojo services, in our opinion, can give investors the next leg of Tesla’s growth narrative as Tesla makes progress on autonomy and software.”
Morgan Stanley also anticipates that Tesla will be able to generate $2,160 in recurring revenue per month from its vehicle owners by 2030, thanks to services enabled by Dojo and subscription software in cars such as self-driving systems, which Tesla does not currently offer, vehicle charging services, maintenance, software upgrades, content, and others to be developed in the future.
Elon Musk stated that by the end of 2017, Tesla would have completed a self-driving cross-country demonstration with no human involvement. Tesla vehicles continue to provide only sophisticated driver assistance technologies, which necessitate a human behind the wheel, ready to steer or brake at any moment.
In contrast, Deutsche Bank, another bullish firm on Tesla, noted risks to the EV maker in Q3 from “planned summer production shutdowns which will push both production and deliveries down QoQ, discounts on inventories, and limited positive costs offsets in the quarter,” and set a price target of $300 in a note released on September 6.
Tesla dropped the cost of its electric vehicles earlier this quarter after executives warned investors on the company’s previous earnings conference that production and delivery volumes would likely fall this quarter against the second due to scheduled facility closures.
Tesla also reduced the cost of its premium driver assistance system, known as Full Self-Driving or FSD in the United States, from $15,000 to $12,000. Among other things, these price decreases have knocked on Tesla’s stock price in recent weeks. However, following the Morgan Stanley report on Monday, Tesla shares surged beyond $272 by midday.
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