Morgan Stanley optimistic about Tesla’s energy storage segment

Morgan Stanley optimistic about Tesla’s energy storage segment
Morgan Stanley optimistic about Tesla’s energy storage segment

Morgan Stanley has raised its rating on Tesla’s energy storage business, citing a surge in global demand driven by the boom in artificial intelligence and the company’s ability to increase its market share in the segment.

The brokerage raised the unit’s value to $50 per share of its $310 price target, up from its previous estimate of $36 per share, while lowering its forecast for Tesla’s 2030 car sales.

It estimates that the profit from a fully operational megafactory producing large storage batteries is equivalent to the profit from selling 1 million Tesla vehicles.

“It’s no wonder investors are starting to consider the real possibility that Tesla Energy could be worth more than Tesla Auto,” said Morgan Stanley analyst Adam Jonas.

Tesla shares have risen nearly 44% over the past 10 sessions, marking the longest run in more than a year after a lackluster start to the year.

Daily trading volume for Tesla shares overtook AI darling Nvidia last week for the first time in six months, according to data from LSEG.

Oppenheimer said in a note Tuesday that it expects Tesla’s energy storage revenue to exceed $3 billion in the current quarter, but added that “the value of the fully self-driving AI platform is key to whether shares will continue to rise or weaken again.”

In April, CEO Elon Musk said Tesla will likely launch fully self-driving software later this year, which will bring in big profits.

Tesla deployed 9.4 gigawatt hours of energy storage products in the second quarter of 2024, more than double the amount in the January-March period.

The company’s products include the Powerwall energy storage system for home use and the Megapack, which is intended for large commercial projects and utilities.

Energy storage and generation accounted for 6% of Tesla’s revenue in 2023, with the automotive segment accounting for the rest, according to LSEG data.

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