In a groundbreaking development, Morgan Stanley analysts, led by Adam Jonas, have unveiled a remarkable prediction regarding Tesla’s Dojo supercomputer. According to their analysis, the AI supercomputer could propel Tesla’s market value to unprecedented heights, potentially adding a staggering $777 billion to the company’s worth. This transformative projection underscores Dojo’s pivotal role in accelerating the adoption of robotaxis and network services, positioning Tesla for a future where software and services emerge as the primary drivers of value.
Tesla’s Dojo AI supercomputer sparks stock surge
Morgan Stanley’s optimism stems from Dojo’s potential to open up new addressable markets for Tesla, drawing parallels to Amazon Web Services’ (AWS) transformative impact on Amazon.com. The supercomputer’s primary function is to handle vast volumes of data for training driving systems, providing Tesla with a distinct advantage in the AI and self-driving technology space. According to Jonas, this market holds the potential to be worth an astonishing $10 trillion. Such an advantage could catalyze a monumental shift, making software and services the predominant value drivers for Tesla in the future.
Following the revelation of Morgan Stanley’s bold prediction, Tesla’s stock experienced a significant upswing, surging by 10.1 percent on Wall Street. This remarkable surge comes on the heels of Tesla’s already impressive performance in the stock market, with shares having more than doubled in value earlier in the year. It is worth noting that Morgan Stanley plays a pivotal role as one of Elon Musk’s key advisory firms, including its involvement in the $44 billion takeover of Twitter, which is now known as X.
Tesla has been emphasizing the strategic significance of Dojo in AI and self-driving technology since at least 2021. CEO Elon Musk, during an investor update in July, announced plans to invest over $1 billion in the Dojo project by the end of 2024. This level of investment underscores Musk’s urgency in realizing his Full Self-Driving (FSD) prediction, especially in comparison to other major players like Nvidia, which spent $7 billion across the entire company on research and development in 2022.
While Morgan Stanley’s prediction places Tesla on an ambitious trajectory with a 12-month price target of $400 per share, it’s important to note that their outlook is notably more bullish than the average analyst consensus tracked by Bloomberg, which stands at $268.42 per share. Jonas, undeterred by potential challenges, expressed a strong belief in the untapped value of Dojo, emphasizing that a deeper examination of the supercomputer revealed significant underappreciated potential within Tesla’s stock.
Dojo’s potential to revolutionize Tesla’s software capabilities
Despite the enthusiasm surrounding Dojo, some industry experts caution against unrealistically high expectations. Seth Goldstein of Morningstar Research Services LLC highlights the tendency for Elon Musk’s ambitious timelines to experience delays. Goldstein explains that while Elon Musk pushes the Tesla team to work at a rapid pace, real-world progress often deviates from his original projections. Nevertheless, Goldstein acknowledges that these delays don’t indicate a lack of progress. In fact, he believes that once Dojo is fully operational and takes over software training, it will enable Tesla to update its software more swiftly. This, in turn, will drive subscription growth at software margins, potentially becoming a significant value driver for the company.
As Tesla continues to develop its AI and self-driving capabilities, several key milestones are on the horizon. The release of the next version of Tesla’s Full Self-Driving system, expected by the end of the year, will be closely monitored by investors and industry observers alike. Also, there is speculation about a potential Artificial Intelligence Day in 2024, although Tesla has not officially confirmed such an event. These milestones will play a crucial role in determining the extent to which Dojo’s capabilities translate into tangible advancements in Tesla’s software and autonomous driving technology.
Tesla’s Dojo supercomputer has emerged as a potential game changer in the realm of AI and self-driving technology. Morgan Stanley’s optimistic projection of a $777 billion boost to Tesla’s market value underscores the transformative potential of this technology. While some analysts remain cautious due to past delays in Elon Musk’s timelines, there is no denying the strategic importance of Dojo in shaping Tesla’s future as a leader in software and services within the automotive industry. As Tesla moves forward, all eyes will be on the company’s ability to leverage Dojo’s capabilities and deliver on its promises of a fully autonomous future.
