Morgan Stanley has reinstated Tesla Inc. as its top U.S. auto pick, driven by the company’s growing focus on artificial intelligence and robotics. This endorsement comes despite Tesla’s recent struggles, including a 45% drop in European sales in January and a decline in 2024 annual deliveries.
Key Factors Driving the Projection
- Analyst Adam Jonas highlighted Tesla’s shift from a “pure automotive play” to a diversified focus on AI and robotics, citing significant market potential for non-automotive applications of embodied AI.
- Jonas reiterated his $430 price target for Tesla, implying a nearly 51% upside to the stock’s current price.
- The market potential for humanoid robots is becoming increasingly significant, with Jonas estimating that every 1% of the U.S. labor force captured by Tesla Optimus is worth approximately $100 per share.
Challenges and Opportunities Ahead
- Despite optimistic projections, Tesla’s stock has underperformed the broader U.S. market, declining nearly 25% year-to-date.
- The company faces challenges as an EV manufacturer, with Jonas cautioning that the “EV winter” may be prolonged and could require further steps to mitigate potential losses.
- However, Jonas suggests that deliveries could decrease in 2025, offering an “attractive entry point” for investors.
Insider Activity and Market Trends
- Tesla Chair Robyn Denholm sold nearly $33.7 million worth of company stock on Monday, as part of a previously adopted trading plan.
- This sale follows a trend among Tesla insiders offloading shares amid macroeconomic uncertainties and intensifying competition in the EV market.
- The company’s pivot towards AI and robotics is expected to drive growth, with CEO Elon Musk’s strategy of introducing more affordable models and expanding into new markets.
Conclusion
Tesla’s stock is poised for a significant surge, driven by its growing focus on AI and robotics. Despite recent challenges, the company’s diversified approach and significant market potential make it an attractive investment opportunity. However, investors should remain cautious, considering the potential risks and uncertainties in the EV market.