Could the growth of artificial intelligence benefit Tesla, Elon Musk’s infamous automaker? Morgan Stanley analyst Adam Jonas seems to think so.

In a newly published research note, the auto-industry researcher boosted Tesla’s stock to “overweight” (implying it will outperform competitors) and raised his price target from $250 to $400. The change spurred a 10% jump in TSLA—which trades on the Nasdaq—on Monday up to $271.

The note highlighted Dojo—Tesla’s custom supercomputing system for training its self-driving cars—as a potential catalyst for growth, possibly adding $500 billion to the company’s value through faster adoption of its “mobility” (robotaxi) and network services.

“Dojo is the key to unlocking Tesla’s double-flywheel effect—integrating and accelerating the synergies between Tesla’s Core Auto Flywheel and Tesla’s SAAS Flywheel … accelerating time to market and expanding the addressable market,” Jonas wrote.

Tesla began working on Dojo to solve for a shortage of GPUs suppliable by Nvidia, which has strongly benefitted from the AI boom this year. “If [Nvidia] could deliver us enough GPUs, we might not need Dojo, but they can’t,” Musk said during an earnings call in July, addressing the company’s overreliance on the chipmaker.

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Author: Andrew Throuvalas

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