(Reuters) – Tesla’s supercomputer Dojo to train AI models for autonomous cars would give the electric vehicle maker a “disproportionate advantage” and could increase its market capitalization to $600 billion, or 76 percent, Morgan Stanley estimated.
Tesla began production of the Dojo in July and plans to spend more than $1 billion by next year.
Dojo “could open up new addressable markets beyond just selling vehicles at affordable prices,” Morgan Stanley analysts led by Adam Jonas said in a note published on Sunday.
“If Dojo can make cars ‘see’ and ‘react’, what other markets could open up? Think of any device with a camera that makes real-time decisions based on the field of view.”
The Wall Street brokerage upgraded its recommendation on Tesla stock to “overweight” from “equal-weight” and made it a “top pick,” replacing Ferrari’s U.S.-listed shares.
Morgan Stanley raised its 12-18 month target on Tesla shares by 60% to $400 — the highest among Wall Street brokerages, according to LSEG data — which, it estimates, would give the EV maker a market capitalization of about $1.39 trillion.
That compares to a current market value of $789 billion after Friday’s close of $248.5 billion.
Jonas expects Dojo to drive maximum value in software and services.
The analyst raised revenue estimates from Tesla’s network services business to $335 billion in 2040, up from $157 billion previously.
Jonah the room in 2010 It expects to account for more than 60% of Tesla’s core revenues by 2040, almost doubling from 2030.
“This increase was largely driven by the new opportunity we saw in third-party fleet licensing, increasing ARPU (average monthly revenue per user),” Jonas said.
(Reporting by Roshan Abraham and Suzanne Mathew in Bengaluru; Editing by Savio D’Souza)
