AI Optimism Boosts Tesla Stock: Morgan Stanley Predicts $1 Trillion Market Cap

JJohn September 11, 2023 4:42 PM

Morgan Stanley's upgrade of Tesla's stock, driven by optimism about its AI-driven Dojo supercomputer, led to a 7% surge, suggesting a potential $1 trillion market cap for the automaker. The firm believes that Tesla's AI could unlock a massive Software-as-a-Service opportunity.

Tesla stock hits a month high

Tesla's shares experienced a significant bump recently, reaching their highest intraday level since the beginning of August. This 7% rise took the stock to around $265, a clear indicator of the positive market response to Morgan Stanley's upgrade and the optimism surrounding Tesla's AI capabilities.

Morgan Stanley upgrades Tesla's rating

The surge in Tesla's stock value can be largely attributed to a change in rating by Morgan Stanley analysts, led by Adam Jonas. Upgrading the electric vehicle giant from hold to buy, they also increased their price target for the stock from $250 to $400, signaling a strong vote of confidence in Tesla's future prospects.

Dojo supercomputer drives optimism

A driving factor behind Morgan Stanley's upgrade was their optimism regarding Tesla's Dojo supercomputer. The AI network, primarily designed to train Tesla's self-driving vehicles using video data, was predicted by Jonas to potentially add up to $500 billion in enterprise value for Tesla. This showcases the significant growth potential that AI capabilities hold for the automaker.

Beyond its immediate application in self-driving cars, the machine learning technology behind Tesla's Dojo supercomputer could also become a core component of CEO Elon Musk's other enterprises. These include his social media company X and aeronautics and communications firm SpaceX, further highlighting the broad scope of AI's potential impact.

Elon Musk has shown a strong commitment to developing Tesla's AI capabilities, announcing in July that the company plans to spend well over $1 billion on developing Dojo over the coming year. This substantial investment underscores the priority Tesla is placing on AI and its potential to drive the company's future growth.

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