Tesla's Ambitious AI and Robotics Plans Drive Bank of America's Optimistic $400 Price Target

Tesla's Path To $400: Bank Of America Highlights EV, AI Growth - Alphabet (NASDAQ:GOOG), Alphabet (NASDAQ:GOOGL)

Tesla aims to launch its robotaxi service by 2025. A $30,000 EV in 2025 could expand Tesla's total addressable market. Bank of America significantly raised Tesla Inc's TSLA 12-month price target from $350 to $400, maintaining a Buy rating as the investment bank bets on the company's ability to balance strong near-term growth in electric vehicles with bold long-term plays in autonomous driving and robotics. In a note to clients Thursday, analyst John Murphy highlighted his optimism following a recent visit to Tesla's Gigafactory in Austin, Texas. "The trip gave us increased confidence that Tesla is well-positioned to grow in 2025+," Murphy said, citing discussions with investor relations, a factory tour, and test drives that showcased Tesla's technological advancements. FSD Advances Bolster Robotaxi Prospects Tesla's Full Self-Driving (FSD) technology stood out during the test drive at Gigafactory Austin, with vehicles demonstrating significant improvements. Murphy highlighted how Tesla's Cybertruck and Model Y seamlessly navigated construction zones and managed a challenging left turn against traffic. "Tesla noted that soon its FSD will require an intervention only once every 10,000 miles," Murphy said, emphasizing that the company's autonomous technology is nearing the safety level required to launch a monitored robotaxi service. For comparison, Alphabet Inc.'s GOOG GOOGL Waymo initiated its robotaxi operations after achieving one intervention every 17,000 miles, "a milestone TSLA believes it could achieve shortly with its growing AI compute." Murphy highlighted Tesla's growing AI infrastructure, which includes 50,000 active Nvidia Corp. NVDA H100 chips as of October. This positions the company to potentially launch its robotaxi service by 2025. Optimus: Tesla's Robot Revolution Tesla's humanoid robot, Optimus, is already making strides in automation. Though Optimus currently accounts for just a single-digit percentage of Tesla's AI compute power, Murphy expects this to increase as the robotaxi program stabilizes, accelerating Optimus' development. "With more robots in use, training will accelerate," he said, adding that mass production in 2026 and beyond could drive down costs and open new growth avenues for Tesla. Murphy also indicated Tesla may consider raising capital to support its investments in Optimus, robotaxis, and artificial intelligence. "At its current valuation, Tesla could raise $50 billion+ through an equity raise at a relatively modest 4-5% dilution to shareholders," Murphy stated. "TSLA has historically been able to raise capital at an extremely low cost compared to its peers," he added. Lower-Cost EV And Expanding TAM Tesla plans to launch a lower-cost EV in the first half of 2025, targeting a price point below $30,000, which includes the $7,500 federal EV tax credit. Murphy said this vehicle could expand Tesla's total addressable market (TAM), with cost savings achieved through "a number of areas such as de-contenting, making the motor more efficient and thereby enabling a smaller battery, and changing the interior." Market Reactions Shares of Tesla rose by 3.8% to $371.52 on Thursday, reaching levels last seen in early April 2022, pushing year-to-date gains to 50%. The all-time highs of $414 reached in November 2021 are now approximately 10% above current prices. Read Next: Amazon Hits All-Time Highs, Eyes Best 2-Year Rally Since 2010: Cyber Season Marks Record Sales, AWS Shines With AI Innovations Image created using artificial intelligence via Midjourney. Market News and Data brought to you by Benzinga APIs

Tesla stock target raised at Bank of America after Giga Texas visit By Investing.com

Investing.com -- Bank of America raised its price objective for Tesla (NASDAQ:TSLA) shares to $400 from $350 on Thursday, citing enhanced growth confidence following a visit to Tesla's Giga Texas factory in Austin. The bank said the visit included meetings with investor relations, factory tours, and test drives. "The trip gave us increased confidence that TSLA is well-positioned to grow in 2025+ with its core EV business (new vehicles will expand its TAM) and launch of its robotaxi offering, and longer-term from its investments in Optimus," said the bank's analysts, reiterating their Buy rating on Tesla. "TSLA showcased the capabilities of FSD, which were impressive and much improved from prior versions," stated BofA. The bank said vehicles using FSD versions 12.5 and 13.2 navigated challenging roads autonomously, and Tesla projects interventions of once every 10,000 miles soon -- a benchmark for its anticipated 2025 robotaxi launch. Compared to Waymo's milestones, Tesla's rapid AI compute expansion using 50,000 H100 chips positions it strongly, according to the bank. They note the Optimus robot program is also progressing. Tesla uses these robots for internal tasks, like sorting 4680 battery cells, with plans to scale production to 1,000 units by 2025. Enhanced training and expanded compute resources are expected to accelerate Optimus's development, potentially reducing production costs significantly by 2026. BofA anticipates Tesla's margin growth to transition from hardware-focused to software-driven, leveraging premium services like FSD and connectivity. The analysts noted that Tesla's AI and robotics initiatives could even justify an equity raise to expand compute capacity, a move they believe investors would welcome. BofA views Tesla as well-positioned for long-term growth, reinforcing optimism with an elevated valuation metric based on robust EV/EBITDA projections.

Bank Of America: "Optimus Accounts For Only A Single-digit Percentage Of Tesla's Compute, But We Expect The Resources Available For Optimus Will Grow As The Robotaxi Technology Matures"

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 skeptics have continued to denigrate the prospects of its in-development bi-pedal robot, called Optimus, by terming it a diversionary side-show product. Now, however, seasoned Wall Street analysts are taking notice of Optimus' market-based opportunity for Tesla and hiking the company's stock price target as a consequence. To wit, Bank of America (BofA) analyst John Murphy has attempted to delineate the upside potential for Tesla shares, originating from the still-in-development Optimus robot, in a new investment note today. Murphy begins by pointing out that Tesla currently uses Optimus to perform menial tasks on the factory floor, which include the sorting of the "4680 cells with no intervention." Concurrently, the EV giant continues to test "Optimus in various use cases (i.e., catching a tennis ball) to refine the robot and determine a final design." Murphy then notes: "Optimus accounts for only a single-digit percentage of TSLA's compute, but we expect the resources available for Optimus will grow as the robotaxi technology matures." Tesla plans to deploy around 1,000 Optimus robots on its factory floors by the end of 2025, which should lead to an increase in the available compute resources for the company's bespoke robot. Murphy believes this resource redirection "will drive an acceleration in the capabilities of Optimus, and ultimately lead to increased production in 2026+, thereby helping drive costs down." While bringing up the possibility of a new capital-raising exercise from Tesla to accelerate the development of the Optimus robot, Murphy has raised BofA's stock price target for Tesla shares from $350 to $400, which corresponds to an upside potential of ~11 percent relative to the current stock price of $358. For the benefit of those who might not be aware, Optimus leverages a neural network-trained, AI-equipped brain that allows it to interact with the external elements. The bipedal robot is currently capable of performing menial, labor-intensive tasks, with significant AI capabilities in the pipeline. Tesla's humanoid robot is able to leverage its bespoke neural network to map and navigate obstacles as well as track objects. Despite its heft, Optimus is equipped with sensitive tactile finger sensors that allow the bipedal robot to pick up an egg with finesse. Bear in mind that Deutsche Bank sees Tesla's Optimus bringing in $10 billion in annual revenue by 2035, based on a sales volume of 200,000 units and an ASP of $50,000.