Tesla Inc. (NASDAQ:TSLA) witnessed a substantial rise in its stock value on Tuesday, September 12, 2023, thanks to the company's ambitious venture into the supercomputing realm with their Dojo supercomputer. The stock opened with a 6% increase and closed with a remarkable 10% gain. This follows Morgan Stanley analysts' prediction of a colossal $600 billion surge in Tesla's market value.
The Dojo supercomputer, launched in July, is designed to train artificial intelligence models specifically for self-driving cars. However, its potential extends beyond this primary function. Tesla aims to diversify its market reach through Dojo, potentially opening new markets and revenue streams.
In light of this development, Morgan Stanley upgraded Tesla's stock rating from "Equal-weight" to "Overweight." The financial institution also set an ambitious target for the company's shares within the next 12-18 months, raising it by an impressive 60% to $400. If realized, this would take Tesla's market capitalization to an estimated $1.39 trillion.
On Wednesday, September 13, 2023, Morgan Stanley analyst Adam Jonas reiterated his bullish stance on Tesla's future. He suggested that the company's Dojo supercomputer could add as much as half a trillion dollars to its valuation through faster adoption of robo-taxis and network services. This led to a further boost in Tesla shares by 10%, pushing the stock price over $270 and adding nearly $80 billion to its market capitalization.
However, not all investors share Jonas' optimism. In 2015, Jonas predicted that Tesla would develop a successful "shared mobility" business and roll out fully self-driving taxis by around 2025 - a prediction that has yet to materialize. Some investors have voiced concerns about the complexities of replicating human brain functions, which is a fundamental aspect of autonomous driving technology.
Despite these concerns, Tesla continues to invest heavily in its supercomputing and autonomous driving ventures. Elon Musk revealed in July that the company plans to invest more than $1 billion in Dojo by the end of 2024.
While some investors find Morgan Stanley's $500 billion projection for Tesla "outlandish," others see significant potential in the autonomy market. RBC Capital Markets analyst Tom Narayan, who has a $305 target on the stock, believes that most of that value will come from the robo-taxi business. Cathie Wood of Ark Investment Management LLC also emphasized the importance of Tesla's plans for self-driving cars over its EV strategy, with her firm's 2027 price estimate for Tesla standing at $2,000, attributing over two-thirds to the prospective robo-taxi business.
As Tesla's stock continues to surge, it remains crucial to monitor certain resistance levels. The psychological mark of $300 holds historical significance as a point of price reversals dating back to January 2021. If surpassed, the next milestone would be the August 2022 high of $314. Overcoming these levels could pave the way for the stock to reach its projected valuation of $400.
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