Morgan Stanley has reinstated Tesla (NASDAQ: TSLA) as its top pick in the U.S. auto sector, setting a $430 price target, which implies more than 50% upside from current levels.
Despite Tesla shares dropping nearly 30% year-to-date, analysts at Morgan Stanley view this as a compelling entry point, emphasizing the company’s transition from a pure-play EV manufacturer to a leader in AI and robotics.
Tesla’s Shift Beyond EVs: A Bet on AI & Robotics
While Tesla’s vehicle deliveries have softened, Morgan Stanley sees a broader opportunity in artificial intelligence (AI) and robotics, expanding the company’s total addressable market (TAM).
Humanoid Robotics Could Be a Game Changer
? Analysts highlight the Tesla Optimus robot as a key value driver, estimating that every 1% of the U.S. labor force replaced by Optimus could add $100 per share to Tesla’s stock price.
With AI rapidly moving from software applications to real-world automation, Tesla’s robotics division has the potential to surpass its autonomous vehicle business in significance.
Tesla Energy: A Growing High-Margin Business
? Tesla’s energy storage and solar businesses are gaining traction, driven by rising global energy demand and AI-driven power consumption.
? Morgan Stanley predicts that Tesla Energy could eventually be worth more than the company’s auto segment, with energy storage margins expected to be nearly double those of Tesla’s automotive business.
Tesla’s expansion in energy solutions strengthens its long-term growth trajectory, offering diversified revenue streams beyond vehicle sales.
Declining China Exposure Reduces Risk
? Tesla’s China-sourced revenue accounted for 21% of total sales in 2024, but this figure is projected to decline systematically, reducing geopolitical and regulatory risks.
By shifting its focus to AI, robotics, and energy, Tesla is positioning itself as a global technology leader, less dependent on the volatile Chinese market.
Final Thoughts
Morgan Stanley’s renewed bullish stance on Tesla underscores the company’s evolution beyond EVs, with AI, robotics, and energy storage presenting massive growth opportunities.
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