Tesla supercomputer likely to boost market value by $600bn

Tesla's Dojo supercomputer could power a near $600bn (about R11.36-trillion) jump in the carmaker's market value by boosting the adoption of robotaxis and its software services, Morgan Stanley analysts say.

The electric-vehicle maker (EV) started production of the supercomputer used to train artificial intelligence (AI) models for self-driving cars in July and plans to spend more than $1bn (R18.93bn) on Dojo through next year.

Dojo can open up new addressable markets that "extend well beyond selling vehicles at a fixed price", Morgan Stanley analysts, led by Adam Jonas, said in a note on Sunday.

"If Dojo can help make cars 'see' and 'react', what other markets could open up? Think of any device at the edge with a camera that makes real-time decisions based on its visual field."

The Wall Street brokerage upgraded its recommendation on Tesla's stock to "Overweight" from "Equal-weight" and made it their "top pick", replacing Ferrari's US-listed shares.

Tesla shares were up nearly 5.7% at $262.63 in premarket trading.

Morgan Stanley raised its 12-18 month target on Tesla's shares by 60% to $400 — the highest among Wall Street brokerages as per LSEG data — which, it estimated, would give the EV maker a market capitalisation of about $1.39-trillion (R26.93-trillion).

That compares with its current market value of about $789bn (R14.93-trillion), after the stock closed at $248.5 on Friday.

Jonas expects Dojo to drive the most value in software and services.

Morgan Stanley raised its revenue estimate from Tesla's network services business to $335bn (R6.34-trillion) in 2040, from $157bn (R2.97-trillion) earlier.

Jonas expects the unit to account for more than 60% of Tesla's core earnings by 2040, nearly doubling from 2030.

"This increase is largely driven by the emerging opportunity we see in third-party fleet licensing, increased ARPU (average monthly revenue per user)."

Tesla's 12-month forward price-to-earnings ratio of 57.9 is well ahead of US legacy carmakers Ford at 6.31 and General Motors at 4.56.