Morgan Stanley Raises Tesla's Price Target on AI-Driven Autonomous Vehicle Potential

Morgan Stanley ups Tesla target, gives bull case of $800

Morgan Stanley believes Tesla shares have significant upside as the company rolls out a fleet of autonomous cars, or robotaxis, that run on artificial intelligence. Analyst Adam Jonas on Monday increased his stock price target for Tesla to $430 per share as a base case, suggesting about 9% upside from current levels. The firm also sees a bull case in which Tesla's stock could ultimately double to $800 per share. Tesla's leadership position in semi-autonomous electric robots could allow the company to convert car owners into subscribers "generating highly recurring (and high margin) revenue," Jonas said. The investment bank's base case sees Tesla deploying 7.5 million autonomous vehicles by 2040. The bull case sees the company rolling out 12 million such vehicles vehicles in the same time frame. "Our Bull Case comes into play in situations of international expansion (potentially into Europe) and greater pricing power/fewer competitors," Jonas said. The investment bank also warned of a possible bear case where Tesla deploys 3.5 million autonomous vehicles by 2040. "We envision our Bear Case reflecting headwinds from a combination of tighter regulations, slower geographic expansion, and tougher competitive dynamics," Jonas said. Jonas' call comes as tech stocks have struggled to find solid footing in the new year. Tesla shares were down 1% in trading on Monday, and have fallen more than 3% year to date. The group has been hurt by a rise in bond yields, with the 10-year Treasury yield on Monday touching its highest level since late 2023. These higher yields, and possibility that the Federal Reserve could slow its rate cutting plans, means the cost of capital could remain high this year, which would likely weaken investment as well as consumer spending.

Morgan Stanley lifts Tesla stock target, bull case now $800 By Investing.com

Investing.com -- Morgan Stanley (NYSE:MS) has revised its price target for Tesla (NASDAQ:TSLA) shares, increasing it to $430 from $400, with a new bull case valuation of $800. Tesla's advancements in autonomous vehicle (AV) technology and its integration of embodied AI are highlighted as key drivers for the updated valuation. According to the report, Tesla's unique combination of expertise in data collection, robotics, energy storage, and AI/compute infrastructure has positioned it as a leader in the emerging autonomous mobility market. The analysts emphasized the role of Tesla Mobility, the company's autonomous rideshare division, which is valued at $90 per share in the revised sum-of-the-parts (SOTP) model. The mobility fleet is projected to grow to 7.5 million vehicles by 2040, with an estimated revenue of $1.46 per mile and a 29% EBITDA margin. Morgan Stanley also highlighted the increasing significance of Tesla's Network (LON:NETW) Services, encompassing recurring revenue streams such as Full Self-Driving (FSD), supercharging, and software upgrades. This segment is expected to contribute approximately one-third of Tesla's total EBITDA by 2030, rising to nearly 60% by 2040. The Network Services segment is now valued at $168 per share, reflecting its growing importance to Tesla's business model. "We raise our price target to $430 from $400 previously, driven by increases in our Mobility and Network Services valuations and partially offset by a decrease in our 3rd Party Battery business valuation," analysts led by Adam Jonas wrote. They note that Tesla's broader potential in the embodied AI domain, including possibilities in aviation, marine, and other sectors is not yet factored in the valuation. The analysts anticipate Tesla's unsupervised autonomous vehicle fleet to debut in a city setting by 2026. However, they do not project widespread deployment of autonomous vehicles in their Tesla Mobility forecasts until after 2030. While self-driving policies might undergo reassessment at a national level under the incoming administration, Tesla still faces "significant hurdles" in overcoming challenges related to technology, testing, and permitting for near-term commercialization, analysts added. The updated bull case of $800 per share assumes a fleet size of 12 million vehicles by 2040, generating $1.50 per mile in revenue with a 45% EBITDA margin. This scenario envisions robust international expansion and greater pricing power. On the other hand, Morgan Stanley's bear case valuation of $200 per share reflects potential headwinds such as tighter regulations and slower geographic adoption.

Morgan Stanley's Adam Jonas: "We Have Conducted The Most Extensive Re-Architecture And Expansion Of Our Tesla Mobility (Robotaxi) Model Since Its Initial Publication In 2015"

This is not investment advice. The author has no position in any of the stocks mentioned. Wccftech.com has a disclosure and ethics policy. Tesla has been attracting quite a lot of eyeballs on Wall Street lately, not because its core auto business is doing particularly well, but due to its renewed focus on autonomous vehicles (AVs) and humanoid robots, thereby unlocking a substantially higher Total Addressable Market (TAM) and driving a litany of stock price upgrades in the process. Today, it is the turn of Morgan Stanley's Adam Jonas - an avowed Tesla permabull - to delineate his bullish case for the high-flying stock. At the outset, Jonas declares that his latest Tesla investment note is a product of "the most extensive re-architecture and expansion of our Tesla Mobility (robotaxi) model since its initial publication in 2015." While conceding that Tesla's core auto business continues to face "well-known challenges in the FY25 EV market," Jonas anchors his $800 bull case stock price target for the EV giant on "embodied AI as the key driver for upside." As a refresher, Tesla's EV business continues to contend with expansive headwinds, albeit ones that are somewhat waning. While the EV giant tried to combat anemic demand - which itself is a function of fierce new competition out of China - for its aging product lineup through much of 2023 and 2024 by instituting price cuts and offering incentivized financing, it has recently introduced refreshed versions of Model 3 and Model Y (Juniper), and is rumored to be working on an affordable hatchback model (Model Q) to combat persistent demand-related malaise. Coming back, Jonas notes that much of the recent appreciation in Tesla's share price "reflects its expanding leadership in physical AI, leveraging natural advantages in data collection, robotics, energy storage, AI/compute, manufacturing, and infrastructure," and compounded by "synergies across Elon Musk's companies, such as SpaceX and xAI." Jonas then delivers the following punchline: "We see 2025 as a year where Tesla's unique skillset could be further reflected in its valuation, despite well-known challenges in the FY25 EV market." Beyond 2025, the Morgan Stanley analyst expects "Tesla's total addressable market (TAM) to expand into broader domains, many of which are still not reflected in current financial models." Bear in mind that Elon Musk appears to be increasingly banking on the EV giant's FSD capabilities and the Optimus humanoid robot to drive the narrative around Tesla shares. For instance, Musk has already announced that the "completely autonomous," unsupervised version of the FSD will roll out later this year, with the much-anticipated Cybercab officially launching in 2026. The recently launched, much-improved version 13 of the FSD has played an important role in bolstering the market's confidence in this projected timeline. Concurrently, the CEO of Tesla continues to hype up the Optimus humanoid robot, recently going so far as to declare that Tesla was aiming to produce between 50,000 and 100,000 units of the Optimus robot in 2026 "and then 10x it again the following year. In light of Tesla's "embodied AI" moves, Morgan Stanley has raised its price target for the stock from $400 to $430. The Wall Street titan's bull case target for the stock is now anchored at the nosebleed $800 price level.