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©Reuters. FILE PHOTO: Automaker Tesla’s logo is seen at a dealership in London, Britain, May 14, 2021. REUTERS/Matthew Childs/File Photo
(Reuters) -Tesla rose 6% on Monday after Morgan Stanley said its Dojo supercomputer could fuel a nearly $600 billion boost in the electric car maker’s market value by helping accelerate its foray into robotaxis and software services.
Tesla (NASDAQ:), already the world’s most valuable automaker, started production of the supercomputer to train artificial intelligence (AI) models for self-driving cars in July and plans to raise more than $1 billion next year to spend on Dojo.
Dojo could open new markets that go “well beyond selling vehicles at a fixed price,” Morgan Stanley analysts led by Adam Jonas wrote in a note on Sunday.
“If Dojo can help make cars ‘see’ and ‘respond’, what other markets could open up? Think of any device at the edge with a camera that makes real-time decisions based on its field of view.”
The Wall Street brokerage upgraded Tesla’s stock from “equal-weight” to “overweight” and replaced the US-listed shares of Ferrari (NYSE:) as its “top pick.”
Morgan Stanley raised its 12- to 18-month target for Tesla shares by 60% to $400 — the highest among Wall Street brokers, according to LSEG data — which, it estimates, gives the EV maker a market cap of about would generate $1.39 trillion.
That’s about 76% higher than Tesla’s market value of about $789 billion, based on the stock’s closing price Friday of $248.5. The stock rose about 5.7% to $262.70 on Monday.
Jonas expects Dojo to generate the most value in software and services.
Morgan Stanley raised its revenue estimate for Tesla’s network services business to $335 billion by 2040 from $157 billion previously.
Jonas expects the unit to account for more than 60% of Tesla’s core revenue by 2040, nearly doubling from 2030.
“This increase is largely driven by the new opportunities we see in third-party fleet licensing, higher ARPU (average monthly revenue per user),” the analyst said.
Tesla’s trailing-twelve-month price-to-earnings ratio of 57.9 at 6.31 is well ahead of legacy automakers Ford (NYSE:) and General Motors (NYSE:) at 4.56, according to LSEG data.