Tesla's (TSLA) -) stock has rallied more than 100% throughout 2023 as the company has worked to cement itself as the leader in the electric vehicle sector. But debate among analysts and investors around the actual value of the car company has raged on, centered around a fundamental question: Is Tesla a tech giant or a car company?
To Morgan Stanley (MS) -) analyst Adam Jonas, it's a bit of both, with an important caveat; Tesla's largest revenue opportunity stems not from its cars but from its software and services.
Related: Here's why the Tesla bears are very wrong, according to Wedbush analyst Dan Ives
Jonas, upgrading his Tesla price target to $400 from $250, said in a note that Dojo, Tesla's custom supercomputer, can add up to $500 billion to Tesla's market value through quicker adoption of robotaxis and network services.
Jonas, likening the value of this coming push into software and services to Amazon's (AMZN) -) AWS sector, said that Dojo could open up a new "addressable market" for the company that extends beyond "selling vehicles at a fixed price."
"Almost all of Tesla’s value long-term will be from AI and robots, both vehicle and humanoid," Tesla Chief Elon Musk said in response to the report.
Morgan Stanley's new Tesla outlook echoes opinions held by several prominent analysts and investors.
Wedbush's Dan Ives told TheStreet that Tesla's Full Self-Driving (FSD) technology positions the company as one of the "best AI plays when you look down the road three to five years."
More Tesla:
- Tesla chief Elon Musk says he's 'not building a house anywhere' in wake of federal investigation
- Elon Musk explains final hurdle in Tesla's Full Self-Driving tech
- Elon Musk has a 'purity' around motivation for game-changing EV deal
Ives recently projected that Tesla is poised to earn $20 billion a year in revenue from its Supercharger network by 2030, an early step on the company's road to monetizing a variety of services, something that could bring in tremendous amounts of revenue.
Ives has likened Tesla to the Apple (AAPL) -) of 2008, right before the tech company soared in value on the monetization of its software and services.
Ark Invest is likewise exceptionally bullish on Tesla for similar reasons; the investment firm said in April that it expects Tesla to be trading at $2,000 per share by 2027 as its (currently) nonexistent robotaxi business truly gets off the ground.
“This is not an auto play. This is an autonomous taxi platform play with software-as-a-service like margins,” Wood said. "Tesla should trade like a technology stock and not like traditional automakers, something that analysts and Tesla bears can’t grasp."
Tesla's stock was up more than 6% Monday morning.
If you work for Tesla, contact Ian by email ian.krietzberg@thearenagroup.net or Signal 732-804-1223
