Morgan Stanley says Tesla is both a car and AI company, remains bullish for 2024

investing.com:

Morgan Stanley reiterated an Overweight rating on Tesla Inc. (NASDAQ:TSLA) with a 12-month price target of $380.00 on the stock ahead of what could be another volatile year for the electric automaker.

“It’s not terribly surprising that auto investors are cautious on Tesla given increased competition and a lack of high-volume new products in 2024,” analysts at Morgan Stanley said in a note.

Morgan Stanley expects another challenging year for Tesla in 2024. There’s a chance that Tesla's gross auto margin could reach 10%.

There's also potential for the core operating margin to temporarily turn negative in the upcoming year. If ongoing negative developments persist in the automobile sector, it could adversely affect the stock.

However, according to Morgan Stanley, Tesla is not just an auto company, “It is also an AI company.”

Morgan Stanley remains bullish on Tesla despite a rocky 2023, the 2-million-unit safety recall and negative revision risks as 77% of Morgan Stanley’s valuation of the stock comes from Network Services, Mobility, 3rd-party battery/FSD licensing, Energy and Insurance.

The EV company is also continuing to develop important products beyond the auto sector. The Optimus robot is expected to be an important catalyst to introduce and develop new adjacencies for Tesla’s technologies.

Dojo, Tesla’s custom supercomputing effort will also assist the company in opening new markets beyond the automotive sphere.

“In our opinion, Tesla is definitely an auto company. It is also an AI company. Think ‘and’ not ‘or.’”

Shares of TSLA are up 0.82% in early trading on Tuesday.