Tesla Supercomputer Expected to Increase Market Value by $600 Billion
Updated: Jan 8
In a recent report, analysts from Morgan Stanley have predicted that Tesla's Dojo supercomputer could potentially lead to a staggering $600 billion surge in the automaker's market value.
The supercomputer, which is used to train artificial intelligence (AI) models for self-driving cars, has the potential to drive the adoption of robotaxis and Tesla's software services.
Tesla began production of the Dojo supercomputer in July and has plans to invest over $1 billion in the project through next year. According to Morgan Stanley analysts, Dojo has the ability to open up new markets beyond just selling vehicles, as it can enhance the capabilities of any device with a camera that makes real-time decisions based on visual input.
The Wall Street brokerage firm has upgraded its recommendation on Tesla's stock to "Overweight" from "Equal-weight" and has named it their "top pick," replacing Ferrari's U.S.-listed shares. As a result of this optimistic outlook, Tesla's shares saw a nearly 5.7% increase in premarket trading.
Morgan Stanley has also raised its 12-18 month target on Tesla's shares by 60% to $400, which would give the electric vehicle (EV) maker a market capitalisation of approximately $1.39 trillion. This is significantly higher than Tesla's current market value of around $789 billion.
The analysts believe that Dojo will bring the most value to Tesla in terms of software and services. They have raised their revenue estimate for Tesla's network services business to $335 billion in 2040, up from $157 billion previously. They expect this unit to contribute more than 60% of Tesla's core earnings by 2040, driven by opportunities in third-party fleet licensing and increased average monthly revenue per user.
Compared to traditional automakers like Ford and General Motors, Tesla's forward price-to-earnings ratio of 57.9 is significantly higher. Ford has a ratio of 6.31, while General Motors stands at 4.56.
The potential market value boost from the Dojo supercomputer highlights Tesla's commitment to innovation and its position as a leader in the EV industry. With its advanced AI capabilities, Tesla aims to revolutionise the way we think about transportation and pave the way for a future of autonomous vehicles.
Tesla's Dojo supercomputer could potentially increase the company's market value by $600 billion.
The supercomputer is used to train AI models for self-driving cars and can drive the adoption of robotaxis and Tesla's software services.
Morgan Stanley has upgraded its recommendation on Tesla's stock and raised its target price.