Morgan Stanley Reviews Tesla's (TSLA) AI Day; Compares Musk to Thomas Edison and 'Investors Can't Resist'

Morgan Stanley analyst, Adam Jonas compared Tesla (NASDAQ: TSLA) CEO Elon Musk to Thomas Edison in a recent review of the billionaire’s AI Day presentation. Musk’s 2.5 hr presentation was filled with promise, including ambitions to eliminate the need for manual labor through the use of Humanoid Robots. However, Jonas points out what may be one of Musk’s best ideas to date: “Tesla is running one of the world’s largest, and arguably most ambitious, R&D laboratories to tackle the world’s hardest problems.” Jonas believes Tesla’s R&D lab is one reason why “Investors can’t resist funding the effort.”

Tesla essentially generates profit from just two vehicles (the Model 3 and Model Y) that address segments that account for around 10% of the auto market. Historically, the company was truly dependent on outside capital to continue its development and progress to commercial scale.

It would seem Tesla has the ability to acquire outside capital at a time/form/amount of its choosing. Morgan Stanley forecasts Tesla’s combined capex and R&D budget to reach $26bn by 2027. By comparison, Apple’s combined capex and R&D budget was $26bn last year. NASA’s projected 2021 budget is under $23bn.

As for the Tesla Bot, Jonas has heard feedback from investors who say this was a gimmick and others who say this could be the ‘next big thing. Either way, Morgan Stanley believes that setting a team of scientists towards the task of perfecting a humanoid robot, could help lead to important discoveries relevant to the field of autonomy.

Morgan Stanley Reiterated an Overweight rating on TSLA with a $900 price target. Morgan Stanley believes “Tesla’s Board and senior management team will execute on an array of strategic and commercial moves that are commensurate with this valuation.”

By Michael Elkins | [email protected]

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