Morgan Stanley says Elon Musk 'needs Tesla more than ever'

Published 05/21/2024, 07:03 AM
© Reuters
TSLA
-

Elon Musk now “needs Tesla (NASDAQ:TSLA) more than ever,” Morgan Stanley analysts stressed in a note released Monday.

As AI’s appetite for capital and data continues to grow at a rapid pace, Tesla’s importance within the ‘Muskonomy’ – the broad network of companies and ventures led by Elon Musk – increases accordingly.

According to Morgan Stanley, the broader group of Elon Musk’s businesses may collectively invest tens of billions of dollars in AI infrastructure in the coming years, pointing to the vital role the electric vehicle (EV) giant plays in this interconnected ecosystem.

“Cost of capital is deterministic for AI supremacy,” analysts highlighted.

They believe that Tesla’s success would play a crucial role in lowering the cost of capital within the broader Muskonomy. In contrast, if the company were to fail, it would raise the cost of capital for Musk's interconnected business network.

“In addition to the cost of capital, we believe on a fundamental level that the data, infrastructure built and path to monetization within Tesla is critical to Musk’s seemingly ‘adjacent’ AI efforts,” analysts wrote.

Data captured by Tesla vehicles, both inside and out, notably improve AI learning and development, Morgan Stanley noted.

The automotive total addressable market (TAM), often referred to as the "internet of cars," is one of the largest in the world, encompassing 12 trillion miles and hundreds of billions of vehicle hours.

The car’s unique attributes, such as mobile servers, computing capabilities, thermal management, and energy storage, are viewed as vital in the emerging AI-driven hybrid compute ecosystem, explained analysts.

These attributes have broad implications for the broader automotive industry, not just for Tesla, they added.

Meanwhile, the distinction between devices like phones, robots, and mobile AI assistants is becoming increasingly blurred, the Wall Street giant noted.

“Over time, we expect to see Mr. Musk’s efforts within social media/gen-AI, space/communications, automotive/transportation become more conspicuously linked,” the firm said.

Next month, Tesla will host its Annual Shareholder Meeting, an event analysts believe investors should closely monitor.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.