Morgan Stanley analysts have issued a bullish forecast for Tesla, predicting the stock could surge to $500 per share—a remarkable 50% gain from its Tuesday afternoon trading price of $332.45. Led by analyst Adam Jonas, the team argues that Tesla’s future lies far beyond its current identity as an electric vehicle manufacturer, with artificial intelligence and autonomous driving capabilities poised to be the “great unlock” that transforms the company into an AI powerhouse.
Currently, 80% of Tesla’s year-to-date revenues come from vehicle sales, which has led many investors to exclude the company from the enthusiasm surrounding AI, datacenters, renewable energy, robotics, and on-shoring initiatives. However, Morgan Stanley believes this perception could dramatically shift as Tesla successfully implements initiatives outside its core automotive business. The analysts describe Tesla as “a collection of call options,” with many potentially moving into profitability in the near future.
Tesla’s energy sector is already showing explosive growth, with storage deployments more than doubling last year and on track to repeat that performance in 2024. This rapid expansion has led analysts to suggest that Tesla’s energy business could soon surpass its automotive division in value—a notion that would have seemed controversial just quarters ago.
The autonomous driving capabilities represent perhaps the most significant opportunity. Morgan Stanley believes that winners in the autonomy space will be companies that can combine expertise in data, robotics, energy, AI, manufacturing, and downstream infrastructure—all areas where Tesla has demonstrated capability.
Adding another dimension to the bullish thesis is CEO Elon Musk’s newfound political influence following Donald Trump’s election victory. Musk became a key Trump ally during the campaign, donating millions and campaigning in swing states like Pennsylvania. Since the election, Tesla’s stock has surged 34%, continuing to trade near two-year highs. Analysts suggest that Musk’s political connections could accelerate policies favorable to EVs, autonomous vehicles, robotics, and renewables, comparing the potential government-industrial partnership to historic initiatives like the Manhattan Project or Apollo Missions.
Key Quotes
Tesla is a car company. That is a fact. However, we also view Tesla as a collection of call options. Many of these call options have exercise dates far out into the future. Many may not be exercised at all. Others may be starting to move into the money right now.
Morgan Stanley analysts, led by Adam Jonas, explain their investment thesis for Tesla, suggesting the company’s value extends far beyond its current automotive revenue stream into multiple future growth opportunities including AI and energy.
In our opinion, the winners in autonomy (whether in cars or other form factors) will be those firms who can combine capabilities in data, robotics, energy, AI, manufacturing and downstream infrastructure. We believe Tesla has the capability to benefit from this theme over time.
The Morgan Stanley team outlines why they believe Tesla is uniquely positioned to dominate the autonomous driving and AI space, emphasizing the company’s integrated approach across multiple technological domains.
Setting the United States on a course for EV/AV/Robotics/Renewable independence is going to involve government and industrial partnership on a scale some have compared to the Manhattan Project, US Highway Act or the Apollo Missions. Elon Musk’s emergence from a political ‘outsider’ to having a voice in potential policies may, at some level, accelerate Tesla’s journey beyond autos.
Analysts draw historical parallels to explain the potential scale of government-industry collaboration in AI and autonomous systems, suggesting Musk’s political influence could significantly accelerate Tesla’s transformation beyond automotive manufacturing.
Our Take
This Morgan Stanley analysis represents a critical inflection point in the AI investment narrative. Wall Street is beginning to recognize that autonomous driving isn’t just about cars—it’s fundamentally an AI problem requiring massive computational power, sophisticated neural networks, and real-world data at scale. Tesla’s fleet provides exactly this advantage, creating a data moat that could prove insurmountable for competitors.
The political dimension adds an intriguing wildcard. Musk’s potential influence over AI and autonomous vehicle policy could create regulatory tailwinds that accelerate Tesla’s timeline while potentially creating barriers for competitors. However, this also raises important questions about conflicts of interest and whether policy should be shaped by those with direct financial stakes in the outcomes. The comparison to the Manhattan Project is particularly telling—it suggests a level of government-industry integration that could reshape how America approaches AI development and deployment in the coming decade.
Why This Matters
This analysis represents a pivotal moment in how Wall Street views Tesla’s AI potential. For years, Tesla has been categorized primarily as an automotive company, excluded from the AI investment thesis that has driven massive valuations for tech giants. Morgan Stanley’s reframing of Tesla as an emerging AI powerhouse—particularly through autonomous driving technology—could trigger a broader reassessment across the investment community.
The implications extend beyond Tesla’s stock price. If autonomous driving becomes Tesla’s “great unlock,” it validates the company’s massive investments in AI infrastructure, neural networks, and data collection through its fleet of vehicles. This could accelerate the timeline for widespread autonomous vehicle adoption and intensify competition in the AI-powered transportation sector.
Moreover, the intersection of political influence and AI policy highlighted in this story signals a new dynamic where tech leaders may directly shape regulatory frameworks governing AI development, autonomous systems, and renewable energy. This precedent could fundamentally alter how AI technologies are deployed and regulated in the United States, with implications for the entire industry’s trajectory.
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