On Monday, Tesla saw a 6% surge in its stock price following a report from Morgan Stanley suggesting that the company’s Dojo supercomputer could potentially boost its market value by nearly $600 billion. The supercomputer’s role in accelerating Tesla’s efforts in the fields of robotaxis and software services was highlighted.
Tesla, already recognized as the world’s most valuable automaker, initiated the production of the Dojo supercomputer in July, with plans to invest over $1 billion in the project throughout the coming year.
According to Morgan Stanley analysts, led by Adam Jonas, Dojo has the potential to create new markets that extend beyond traditional vehicle sales. They noted in a Sunday report that, “If Dojo can enhance a car’s ability to ‘see’ and ‘react,’ what other markets could it open up? Think of any device equipped with a camera at the edge that can make real-time decisions based on its visual field.”
In response to this positive outlook, the Wall Street brokerage firm upgraded Tesla’s stock rating from “equal-weight” to “overweight” and replaced Ferrari’s U.S.-listed shares with Tesla as their “top pick.”
Morgan Stanley significantly increased its 12-18 month price target for Tesla’s shares by 60%, now at $400, which is the highest projection among Wall Street analysts. This would result in an estimated market capitalization of approximately $1.39 trillion, a 76% increase from Tesla’s current market value of around $789 billion (based on a closing stock price of $248.5 on Friday). On Monday, Tesla’s stock price climbed by approximately 5.7% to reach $262.70.
Adam Jonas expects that Dojo will have the most substantial impact on Tesla’s software and services offerings. The firm also revised its revenue estimate for Tesla’s network services business, projecting $335 billion in revenue by 2040, up from an earlier estimate of $157 billion. Jonas anticipates that this unit will contribute to over 60% of Tesla’s core earnings by 2040, nearly doubling its contribution from 2030. This growth is attributed to the emerging opportunities in third-party fleet licensing and increased average monthly revenue per user (ARPU).
Comparatively, Tesla’s 12-month forward price-to-earnings ratio stands at 57.9, surpassing traditional automakers like Ford (6.31) and General Motors (4.56), according to LSEG data.
