Morgan Stanley analysts have reaffirmed Tesla (TSLA, Financial) as their "Top Pick," raising the target price by 7.5% to $430. This increase reflects optimism about Tesla's autonomous driving technology and embodied artificial intelligence (EAI), which are expected to expand the company's market potential beyond current financial models.
Despite a recent 18% drop in Tesla's stock price from its December high, analysts led by Adam Jonas maintain a bullish outlook. They foresee a potential price of $800 in a bull market scenario, indicating a possible doubling from recent closing prices. The positive outlook is driven by Tesla's advancements in AI and EAI, which integrate AI into physical entities like robots.
The report highlights the growing interest in autonomous vehicles, prompting a comprehensive restructuring of Tesla's robotaxi model since its 2015 debut. Analysts believe AI will be a key driver in reaching the $800 bull market target. They emphasize Tesla's competitive edge in data collection, robotics, energy storage, and AI, bolstered by Elon Musk's other ventures like SpaceX and xAI.
Morgan Stanley anticipates 2025 will be pivotal for reflecting Tesla's unique skills in its valuation, countering challenges in the electric vehicle market. Analysts expect Tesla's total addressable market to expand, covering areas not yet included in financial models.
In their valuation model, Tesla's autonomous ride-sharing business is valued at $90 per share, with a projected EBITDA margin of 29% by 2040. Additionally, Tesla's network services, including software and FSD subscriptions, are valued at $168 per share, contributing nearly 60% of EBITDA by 2040.
