Technology stocks, specifically those in the consumer discretionary sector, drove the market higher today. And leading the pack was electric vehicle maker Tesla.
The world’s most valuable automaker received a boost after Morgan Stanley’s Adam Jonas said the company’s Dojo supercomputer could drive $600 billion in market cap gains. 🤑
So, what is Dojo? It’s the supercomputer Tesla began producing in July to train artificial intelligence (AI) models for self-driving cars, and plans to invest over $1 billion per year into it.
Along with the note, Morgan Stanley upgraded the stock from equal-weight to overweight and raised its 12-18-month price target by 60% to $400, making it the highest on Wall Street.
The overall thesis is that this technology can help speed up Tesla’s push into robotaxis and software services, where most analysts expect its high-margin growth to come from eventually. However, these estimates from Morgan Stanley would require Dojo to do a lot of heavy lifting… 🏋️
For example, Adam Jonas raised his revenue estimate for Tesla’s network services business from $157 billion to $335 billion by 2040. That’s a 113% jump based primarily on the success of one project with about $1 billion in current funding. 😮
Many skeptics highlighted the leap of faith this forecast requires. They also pointed to Morgan Stanley’s lackluster coverage of Tesla in the past, with its analyst team seemingly behind the curve at every major inflection point.
However, $TSLA shares rode the optimism higher, rising 10% on the day and dragging the market higher with it. ⚡