Tesla surged by almost 10% on Monday following Morgan Stanley’s upgrade on the stock from a “hold” to a “buy” and lifting their price target from $250 to $400. This substantial increase was primarily based on the assumption that Tesla’s Dojo supercomputer possesses the potential to lift the electric car manufacturer’s market capitalization by nearly $500 billion. It’s worth noting that Tesla’s current market cap stands at approximately $800 billion.
Tesla initiated the production of its Dojo supercomputer in July, allocating more than $1 billion for its further development throughout the upcoming year. The notion that Tesla should be perceived not only as an automaker but also as a technology company has boosted investor’s sentiment.
Dojo is an in-house supercomputer that has been in the works at Tesla for five years, which is designed to train AI systems to complete complex tasks like assisting Tesla’s driver-assistance system autopilot as well as help propel its “Full Self-Driving” efforts.
While Dojo remains in its early developmental stages, it is anticipated that its applications will extend beyond the automotive industry. Designed to process visual data, Dojo can lay the foundation for vision-based AI models in areas such as robotics, healthcare, and security. Tesla advances in autonomy and software, third-party Dojo services could offer investors a substantial growth opportunity.
Dojo, Tesla’s artificial intelligence network tailored for training self-driving vehicles through video data, positions Tesla to extend its reach beyond traditional vehicle sales and establish a strong presence in the lucrative software-as-a-service market. However, monetizing this service by offering it to external companies is considered a long-term prospect.
Shares of Tesla have gained 166% since the beginning of the year but are still far off from the all-time intraday high of $414.50 reached in November 2021.While the price jumped substantially on Monday, investors should be cautious as there is a lot of hope built into Morgan Stanley’s upgrade.
From a technical analysis perspective, the stock is facing a heavy overhead resistance at $300. Unless this static and dynamic resistance is cleared its hard to declare that blue skies are ahead from here. However, a subsequent break above this key level of resistance will change the technical setup and will have bullish implication over the medium to long-term.
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Sandeep holds an M.S. in Finance as well as an MBA from Illinois Institute of Technology Chicago.
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Violeta joined Leverage Shares in September 2022. She is responsible for conducting technical analysis, macro and equity research, providing valuable insights to help shape investment strategies for clients.
Prior to joining LS, Violeta worked at several high-profile investment firms in Australia, such as Tollhurst and Morgans Financial where she spent the past 12 years of her career.
Violeta is a certified market technician from the Australian Technical Analysts Association and holds a Post Graduate Diploma of Applied Finance and Investment from Kaplan Professional (FINSIA), Australia, where she was a lecturer for a number of years.
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He joined Leverage Shares from UniCredit, where he was a corporate relationship manager for multinationals. His previous experience is in corporate finance and fund administration at firms like IBM Bulgaria and DeGiro / FundShare.
Oktay holds a BA in Finance & Accounting and a post-graduate certificate in Entrepreneurship from Babson College. He is also a CFA charterholder.
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