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The larger the object, the more force is required to move it. and, be Market capitalization 800 billion dollars, moving tesla (NASDAQ:TSLA) Considerable force is required. The company will need to generate significant value in the coming years to maintain the stock’s upward momentum. And Morgan Stanley analyst Adam Jonas believes this could come from investments in artificial intelligence (AI) and self-driving technology.
Jonas recently reiterated his “overweight” buy rating on Tesla stock and a 12-month price target of $380, representing a 46% upside from current price. The analyst believes Tesla’s potential to become a diversified technology company masks short-term headwinds in its auto business. Let’s dig deeper into what will happen in the future.
dojo edge
Self-driving cars have been described as the “mother of all AI projects” due to the complexity of dealing with so much real-time, unpredictable data. Making this concept work may require a virtual form of AI called . Artificial general intelligence (AGI)This allows software to think and learn on the same level as humans. And Tesla, at the forefront of the race to fully autonomous driving, may have a head start on developing more innovative technology.
For Jonas, Tesla’s Edge is centered around Dojo, a supercomputer being built to train machine learning and fully self-driving models. Dojo processes vast amounts of driving data generated by his Tesla car in real-world scenarios. And perhaps more importantly, we use this data to develop. computer vision — A potential predecessor to AGI, which also has use cases in many other industries such as robotics, healthcare, and security.
Jonas believes that as the technology develops, Tesla could eventually start generating significant revenue from software sales and licensing, taking it to the next stage of its growth story.
The reality is probably somewhere in between.
Jonas’ prediction sounds plausible, but it relies on a number of assumptions. The biggest one is that Tesla will be able to achieve full self-driving in the near future, but that’s not guaranteed. Second, other companies are slacking off and not providing meaningful competition for the company’s computer vision software.
But even if Tesla’s results fall short of analysts’ high expectations, investors can still bet on the company’s many other growth drivers.
Tesla’s core auto business is under pressure in the short term, but challenges such as high interest rates are expected to ease over the next few years, boosting demand for new cars. Additionally, management’s pledge to cut the cost of Tesla’s next-generation vehicles in half is starting to bear fruit.
Tesla is developing a $25,000 car called the Model 2 that could arrive in 2025, CEO Elon Musk said. This follows a Reuters report that the company plans to build the 25,000 euro ($26,863) car for the EU market at its own factory. in Berlin, Germany. Lower car prices could allow Tesla to achieve its long-term goal of becoming a mass-market carmaker, and increase production to offset lower profit margins.
What’s next for investors?
Entering 2024, Tesla will no longer be the loud buy stock it was in early 2023. Price earnings ratio (PER) multiple The company is once again a tough sell for value-minded investors. That said, Tesla has a track record of proving naysayers wrong and justifying its hefty price tag.
Jonas’ bullish comments highlight the potential for Tesla to be more than just an electric car maker. And if the company achieves even a fraction of his lofty vision, shareholders will be rewarded handsomely. For me, this stock is still a buy or an optimistic hold until more data becomes available.
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Will Ebifang has no position in any stocks mentioned. The Motley Fool has a position in and recommends Tesla. The Motley Fool has a disclosure policy.
1 The top artificial intelligence (AI) stocks to buy before they soar 46%, according to Wall Street analysts, published by The Motley Fool
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