Tesla shares jump after Morgan Stanley predicts Dojo supercomputer could add US$500 billion in market value

A driver gets into his car at an electric vehicle charging station outside of a Tesla dealership in Beijing, Saturday, June 24, 2023. (AP Photo/Mark Schiefelbein)

New York — Tesla’s Dojo supercomputer could fuel a US$500 billion jump in the electric vehicle maker’s market value, analysts at Morgan Stanley said in a note Monday.

Shares of Tesla jumped more than 6% during early trading Monday morning, on the heels of the rosy prediction from Morgan Stanley’s team about the automaker’s supercomputing efforts. The Morgan Stanley team, lead by longtime Tesla analyst Adam Jonas, predicted that the massive drive in value could come from Dojo potentially unlocking new revenue streams through the wider adoption of robotaxis and software services.

The analysts compared the potential of Dojo at Tesla to the “same forces that have driven” Amazon Web Services to propel Amazon’s profitability to new heights.

“Investors have long debated whether Tesla is an auto company or a tech company. We believe it’s both, but see the biggest value driver from here being software and services revenue,” the note stated.

Dojo, an in-house supercomputer that has been in the works at Tesla for some five years, is designed to train AI systems to complete complex tasks like assisting Tesla’s driver-assistance system Autopilot as well as help propel its “Full Self-Driving” efforts.

The Morgan Stanley analysts see Dojo as being able to open up “new addressable markets that extend well beyond selling vehicles at a fixed price.”

The analysts added that the latest version of Tesla’s full self-driving system (expected to be unveiled at the end of the year) and Tesla’s next AI day (expected in early 2024, but yet to be announced) will be “worth watching.”

Shares of Tesla have doubled since the beginning of the year, but are still far off from the all-time intraday high of $414.50 hit in November 2021. The world’s most valuable carmaker had a market cap of some $788.74 billion as of the market close on Friday.