It seems that Wall Street is now taking a fresh look at Tesla (NASDAQ:TSLA) following an encouraging report from Morgan Stanley. This report highlights the potential of Tesla's Dojo supercomputer, suggesting that it could contribute a staggering $500 billion to the company's overall enterprise value. As a result of this optimistic assessment, TSLA shares experienced substantial gains on Monday, closing the trading day with a remarkable 10% surge, reaching $273.58 per share.
The credit for this renewed enthusiasm goes to Morgan Stanley's analysts, led by the seasoned Tesla observer, Adam Jonas. In their recent note, Tesla was hailed as a "Top Pick," and the analysts upgraded the EV manufacturer's rating from "Equal Weight" to "Overweight." Additionally, they raised their price target for Tesla stock from $250 per share to an exceptionally optimistic $400 per share.
In their report, Morgan Stanley analysts drew parallels between the forces driving Amazon Web Services (AWS) to contribute 70% of Amazon's total EBIT and the potential impact of Dojo on Tesla. They believe that Dojo could open up new markets far beyond conventional vehicle sales at fixed prices, representing a significant catalyst for Tesla's growth.
"The more we examined Dojo, the more we recognized its potential to unlock underappreciated value in Tesla's stock. We see Dojo as the next transformative step in reshaping the market's perception of Tesla," the analysts asserted.
During Monday's rally, Tesla's market valuation soared to an impressive $868.34 billion, adding over $70 billion in market capitalization in a single day. Notably, other mega-cap companies also enjoyed a favorable day, with Amazon rising by 3.5% and Microsoft witnessing a 1.1% increase. Intriguingly, artificial intelligence initiatives also propelled Meta Platforms, which surged by 3.25% on Monday, partly due to reports suggesting the company's work on a new AI system.
The broader market also displayed positive momentum, with the S&P 500 advancing by 0.67%, the Nasdaq gaining 1.14%, and the Dow Jones Industrial Average rising by 0.25% on Monday.
Morgan Stanley's bullish outlook on Dojo aligns with Tesla's own expectations. The Dojo supercomputer is poised to substantially reduce the training time for Tesla's AI systems, accelerating the deployment of enhancements to systems like Autopilot and Full Self-Driving. Elon Musk disclosed in June that Dojo is already operational and could have applications extending beyond Tesla's FSD program.
"It's not limited to Tesla cars. Those who have witnessed the Full Self-Driving beta can appreciate how rapidly the Tesla neural network is learning to drive. This is just one application of AI, but I believe there are more applications on the horizon that will make sense," Musk stated.
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