Palo Alto, CA – Tesla’s stock price rose sharply today after Morgan Stanley analyst Adam Jonas upgraded the automaker’s rating and raised his price target, citing the company’s new Dojo supercomputer.
In a note to investors, Jonas increased his rating on Tesla from “equal weight” to “overweight” and boosted his price target from $250 to $400 per share. The more bullish forecast sent Tesla’s stock price up over 6% in pre-market trading.
The key driver of Jonas’ revised outlook is Tesla’s development of the Dojo supercomputer. Dojo, named after the training space in martial arts, is a custom-built AI training computer that Tesla claims will be able to train vast neural networks faster than any other existing system.
According to Tesla, Dojo will be able to train AI systems at lighting speed, processing vast amounts of video data to speed development of Tesla’s automated driving technology.
“We believe Dojo should enable Tesla to leapfrog competitors in the autonomous driving race,” wrote Jonas. He thinks the supercomputer could add $500 billion in incremental market cap for Tesla over the next two decades.
Jonas also noted that Dojo will further Tesla’s transition toward becoming a vertically integrated sustainable energy and autonomous driving company. With Dojo, Tesla aims to control its AI software and hardware stack from chip design to data centers.
Tesla stock closed up 10.09% on the news, reaching $273.58 after hitting an intraday high of $274.85 per share. While one analyst’s predictions may not move the stock significantly, Dojo does appear to be a potentially game-changing asset for Tesla as it pushes toward full self-driving capabilities.
