Tesla stock received an upgrade and a 60% price target hike Sunday, on the calculation that its Full-Self Driving (FSD) supercomputer can boost the EV giant's value by a half-trillion dollars. TSLA jumped Monday.
Morgan Stanley's Adam Jonas on Sunday upgraded TSLA stock to overweight, raising his price target to 400. In the 40-page report, Jonas wrote Tesla's Dojo, the supercomputer built to train the company's FSD technology, could play a key role in raising the company's valuation as much as $500 billion. Jonas also wrote that Tesla stock is Morgan Stanley's "top pick."
"The more we looked at Dojo, the more we realized the potential for underappreciated value in the stock. Like many other large-cap tech stocks on your screen, we believe Tesla can reasonably test its all-time highs of $400 over the next 12 months," Jonas wrote Sunday.
The Morgan Stanley analyst added that the firm's bull case valuation is raised to 550, vs. 450, and the bear case valuation increased to 120, up from 90. Jonas wrote these valuation cases express the potential of Dojo, optimism around Tesla's autonomous robotaxis and Tesla's network services segment.
Tesla stock gained 10% to 273.59 Monday during market trade, advancing above its 50-day moving average as well as an early entry.
"Almost all of Tesla's value long-term will be from AI & robots, both vehicle & humanoid," Tesla Chief Executive Elon Musk posted on X, formerly Twitter, Monday.
Tesla's White Whale: Autonomous Driving
Maybe the greatest unknown for Tesla is the trajectory of Full Self-Driving technology. Musk has long touted FSD as being on the cusp of full autonomy. But, despite its name, FSD remains a Level 2 driver-assist system. Drivers must pay attention at all times, keeping their hands on the steering wheel and ready to take over.
The Tesla CEO has told investors that the "value of a car that is autonomous is enormous." ARK Invest CEO Cathie Wood is among those placing a high valuation on Tesla's FSD.
On April 20, Wood's ARK Invest predicted that Tesla stock will reach a $2,000-per-share price in 2027, compared with around 250 now. The firm sees Tesla's autonomous "robotaxi business" as a "key driver" for this estimated valuation.
ARK previously forecast that Tesla robotaxis would already be generating significant revenue by now.
On Sept. 1, Tesla reduced the price of FSD in the U.S. to $12,000, down from $15,000. Meanwhile, the National Highway Traffic Safety Administration (NHTSA) is close to ending a two-year investigation into Autopilot and FSD, Reuters reported on Aug. 24.
It's unclear if NHTSA regulators will take significant action against the EV giant.
Tesla Stock
After pulling back following July's Q2 earnings report as investor worried over falling profit margins, Tesla has forged a new base with an official 299.29 buy point, according to MarketSmith.
Tesla stock fell Friday, but rose 1.4% to 248.50 last week, bouncing between its 50-day and 21-day moving lines. A decisive move above the 50-day would offer an early entry for TSLA stock, with the Aug. 31 high of 261.18 as a specific trigger.
Tesla stock ranks third in IBD's Automakers industry group. It has a 95 Composite Rating out of 99. Tesla stock has a 85 Relative Strength Rating and its EPS Rating is 93 out of 99.
Please follow Kit Norton on X, formerly known as Twitter, @KitNorton for more coverage.
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