The new supercomputer being developed by Tesla (TSLA), called Dojo, could boost the electric vehicle maker’s market valuation by as much as $600 billion U.S., according to a report by Morgan Stanley (MS).
Tesla reportedly began production of the supercomputer used to train artificial intelligence (A.I.) models for self-driving cars in July of this year and plans to spend more than $1 billion U.S. on its continued development.
In a note to clients, investment bank Morgan Stanley said that Dojo can open up new addressable markets for Tesla that go beyond selling electric vehicles.
Citing the likely impact from Dojo, the Wall Street firm raised its recommendation on Tesla’s stock to “buy” from “neutral” and named the company a “top pick.”
Morgan Stanley also lifted its price target on Tesla’s shares by 60% to $400 U.S., the highest among Wall Street analysts.
Morgan Stanley expects the Dojo supercomputer to drive the most value in software and services at Tesla. The bank forecasts that computing will account for more than 60% of Tesla’s core earnings by 2040.
Tesla’s stock is down 18% over the last 12 months and currently trading at $248.50 U.S. per share.