Tesla stock price forecast: Adam Jonas sees upside to $400

Shares of Tesla Inc (NASDAQ: TSLA) are trending up after a Morgan Stanley analyst dubbed the EV giant a “top pick” in his super bullish note on Monday.

Tesla stock could climb to $400

Adam Jonas upgraded the electric vehicles company to “overweight” today and raised his price objective significantly to $400 which represents about a 60% upside from here.

His bullish call is based primarily on Dojo – a supercomputer designed and built by Tesla to power autonomous driving in its vehicles.

Investors have long debated whether Tesla is an auto company or a tech company. We believe it’s both, but see biggest value driver from here being software and services revenue.

Last month, the multinational launched lower priced variants of its Model S and Model X in the United States (read more). Tesla stock is already about 150% year-to-date.

Dojo is powered by a custom AI chip

Adam Jonas expects the said supercomputer to eventually be worth $500 billion in enterprise value.

He’s positive on Tesla stock also because the company has built a custom AI chip that powers Dojo and is reportedly more energy efficient than the ones from Nvidia Corp. His research note reads:

While it’s difficult to explicitly validate many claims about Dojo, Tesla has a chance of bringing forth a competitive customised solution given its innovation track record and capabilities.

Tesla Inc is expected to report its Q3 results next month. Consensus is for it to earn 67 cents a share versus 95 cents per share a year ago.