Tesla Dojo supercomputer could add $600bn to market value

Tesla shares jumped by 10% after its Dojo supercomputer was projected to power a £481 billion ($600 billion) surge in its market value.

Morgan Stanley said that Dojo would help accelerate the automaker’s campaign into software services and robotaxis.

In a research note titled ‘Unlocking Tesla’s AI Mojo’, analysts at the investment bank said the supercomputer has the potential to open up new addressable markets that ‘extend well beyond selling vehicles at a fixed price’.

“If Dojo can help make cars ‘see’ and ‘react,’ what other markets could open up? Think of any device at the edge with a camera that makes real-time decisions based on its visual field,” said the analysts.

The research was led by Adam Jonas of Morgan Stanley.

“Investors have long debated whether Tesla is an auto company or a tech company. We believe it’s both, but see the biggest value driver from here being software and services revenue,” added Jonas in the note.

The Dojo supercomputer went into production in July this year. It was developed to train artificial intelligence (AI) models for self-driving cars.

After adding more than 1,600 NVIDIA A-100 GPUs, Dojo was announced as the world’s 7th largest supercomputer.

Tesla’s founder Elon Musk said Tesla will spend more than £859 million ($1 billion) on Dojo through 2024.

Tesla Stocks Rise on the Promise of AI

Morgan Stanley upgraded Tesla’s stock to ‘overweight’ from ‘equal-weight’. It also raised Tesla’s 12-18 month share target by 60% to  £320 ($400) per share.

If Tesla reaches this target, it would result in the company having a market capitalisation of £1.11 trillion ($1.39 trillion). This is approximately 76% higher than the company’s current market value, which is estimated at £632 billion ($789 billion).

The new target is the highest among all the estimates from Wall Street brokerages, according to data from the London Stock Exchange Group (LSEG).

Morgan Stanley also increased its revenue projection for Tesla’s network services division from £134 billion ($157 billion) to £287 billion ($335 billion) by 2040.

By this time, it is anticipated that this division will make up more than 60% of Tesla’s core earnings.

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