Following Morgan Stanley's increase in price target to $400 on AI optimism, Tesla stock rises by 7%

TOPLINE Early on Monday, Tesla rose to its highest share price in more than a month on the strength of an upgrade from Morgan Stanley that highlighted a non-vehicle income stream that could support a market valuation of more than $1 trillion for the Elon Musk-led company.

In early trade, Tesla shares rose over 7% to approximately $265, reaching its highest intraday record since August 1

The increase follows a rating upgrade from hold to buy for the electric car company by analysts at Morgan Stanley, lead by Adam Jonas, who also raised their price objective for the stock from $250 to $400

The main driver of Morgan Stanley's boost was its confidence in Tesla's Dojo supercomputer, which Jonas predicted could increase the company's enterprise value by much to $500 billion for Tesla, which has a market capitalization of currently about $800 billion

ESSENTIAL QUOTE

The machine learning technology "Dojo may have the capability to be the core of the 'Muskonomy,'" Jonas asserted, might also become the backbone of SpaceX, the aerospace and communications company run by Tesla CEO Elon Musk, as well as X, his social media company.

IMPORTANT HORIZONS

Tesla would spend "well over" $1 billion over the next year building Dojo, Musk said investors in July. "With Dojo, [Tesla] believes it will be able to have a supercomputer specifically designed for its image and video processing needs," said Deutsche Bank analysts under the direction of Emmanuel Rosner in a letter to clients last week. With a year-to-date gain of more than 100%, Tesla stock is one of the best performers on the S&P 500 in 2023. Tesla is still down almost 35%