According to Morgan Stanley, Tesla Inc.’s Dojo supercomputer might increase the company’s market worth by up to $500 billion by accelerating the use of robotaxis and network services.
Dojo has the potential to open up “new addressable markets,” much like AWS did for Amazon.com Inc., according to analysts Adam Jonas and Daniela M Haigian in a note that upgraded the stock to overweight from equal-weight and increased its 12-month price objective to a Street-high $400 per share from $250. In US premarket trading on Monday, shares of Tesla, which have already more than doubled this year, increased as much as 4%.
They argued that the supercomputer, which is intended to handle enormous volumes of data in training driving systems, may provide Tesla “an asymmetric advantage” in a market with a potential value of $10 trillion, and that it might cause software and services to become the company’s main value generator going forward. They noted that it would be worthwhile to keep an eye on Tesla’s upcoming full self-driving system update, which is anticipated by year’s end, as well as the company’s AI day in early 2024.
Since at least 2021, Tesla has made reference to how Dojo provides them an advantage in AI and self-driving technology. The manufacturer intends to invest more than $1 billion on the project by the end of 2024, according to CEO Elon Musk, who spoke to investors in July of this year.
This Morgan Stanley base-case target would bring the stock close to its record closing price of $409.97 in November 2021. That establishes the business as a prominent outlier: Bloomberg’s analysts are tracking have an average price objective of $268.42.
The potential for overlooked value in the stock became increasingly apparent to us as we studied Dojo, according to the Morgan Stanley analysts.