"AI+ Energy Storage" Double Buff Continues to Catalyze! Has Tesla's New "Primary Uptrend" Begun?

According to the financial news app Zhitong Finance, global electric vehicle leader and autonomous driving pioneer Tesla (TSLA.US) saw a significant rebound of 10.2% on Tuesday, and in early trading on Wednesday, US stocks surged more than 3%. Tesla's second-quarter delivery volume exceeded expectations, and the enthusiasm for the Robotaxi event scheduled for August 8th is growing, leading to a general surge in electric vehicle stocks. Furthermore, the two major "super Buffs" of AI and energy storage have recently continued to drive Tesla's stock price up. With its leading AI supercomputing system, Tesla has created the FSD fully autonomous driving system and the upcoming Robotaxi autonomous driving taxi, positioning itself as a leader in the AI field. Tesla's energy storage business is also expected to benefit from the global wave of AI data center construction.

Dan Ives, a senior analyst at the well-known Wall Street investment firm Wedbush Securities, raised Tesla's 12-month target price from $275 to $300 this week, reiterating an "outperform" rating and setting the most optimistic target price at $400. Morgan Stanley analyst Adam Jones, known as the "Tesla bull," maintained a target price of up to $310 for Tesla this week, reiterating a "buy" rating. As of early US stock trading, Tesla's stock price hovered around $235.

The latest delivery data exceeding expectations is undoubtedly the main driving force behind Tesla's stock price surge. The company delivered 443,956 vehicles in the second quarter, a 4.7% decrease from the same period last year, but 1.8% higher than FactSet's estimate of 436,000 vehicles. Wall Street analysts' expectations ranged from 420,000 to 425,000 vehicles. Tesla produced approximately 411,000 vehicles during the quarter, which is also positive news. Exceeding sales over production means reduced inventory, easing the pressure for price reductions.

Wedbush analyst Dan Ives emphasized: "With the successful implementation of most price reduction plans and the stabilization of global electric vehicle demand, especially in China, we believe Tesla should achieve a significant momentum and easier competitive situation in the coming quarters, ultimately reaching the goal of 2 million deliveries shortly and achieving better performance by 2025."

Dan Ives stated that Wedbush's optimism about the electric vehicle leader Tesla is mainly due to the recognition by Wall Street institutions that Tesla may be the most underestimated "AI investment target" in the US stock market. Ives and his analysis team believe that in the most optimistic scenario, Tesla's single business of fully autonomous driving (FSD) based on AI supercomputing could be worth as much as $1 trillion, exceeding Tesla's current market value of around $700 billion. On the Seeking Alpha website, renowned stock analyst Bill Morley stated that Tesla's delivery data for the second quarter is undoubtedly very optimistic. After experiencing a wave of sell-offs, analysts may start to raise their price targets for Tesla. Previously, they were bearish on Tesla. Following the recent uptrend in stock prices, Tesla's current stock price has surpassed its 50-day, 100-day, and 200-day moving averages. Some more optimistic stock analysts have indicated that Tesla shorts are starting to exit, and the stock price has entered a new "primary uptrend" mode.

Morgan Stanley analyst Adam Jones, known as the "Tesla Bull," attributes Tesla's incredibly strong price target expectations to artificial intelligence (AI) and energy storage, the two "super buffs."

The "AI Buff" on Tesla is finally gaining momentum

Just as Musk said on Twitter, Tesla is not just a simple electric vehicle manufacturer but also a leader in the AI field.

NVIDIA CEO Jensen Huang recently praised Tesla's FSD built on AI supercomputing in a media interview. Tesla's FSD is based on the Dojo superchip and NVIDIA's high-performance AI GPU (mainly the H100, Musk mentioned future procurement of Blackwell architecture GPUs). These powerful hardware systems support Tesla's FSD with massive training/inference computing power demands. Huang and other tech giants have publicly stated that Tesla's FSD is currently the most advanced driver assistance system, capable of fully achieving autonomous driving in most situations, freeing human hands completely.

"Tesla leads the world in autonomous driving cars." NVIDIA CEO Jensen Huang stated in a media interview. Huang added, "The truly revolutionary aspect of Tesla's 12th version of fully autonomous driving cars is that it is an end-to-end generative model." "It learns how to drive end-to-end by watching videos—surround videos—and uses generative AI technology to predict paths and understand how to drive cars. Therefore, this technology is truly revolutionary, and the work Tesla has done is incredible."

Huang also predicts that one day "every car" will have some level of autonomous driving capability—this development will require a large AI hardware computing system. "This technology is very similar to the technology of large language models, but it only requires a huge training infrastructure," he referred to Tesla's FSD system here. "This is because there is video data, and the rate and volume of video data are so high."

It is understood that Tesla's latest FSD version 12 is currently in the preliminary testing phase and earlier this year offered a 30-day free trial to new car owners. The current pricing for Tesla's FSD is $99 per month or a one-time payment of $8,000 to officially purchase FSD. Tesla reported in April that since its debut in March 2021, FSD has accumulated over 1.3 billion miles of driving However, the FSD is still considered a Level 2 autonomous driving system by global automotive regulatory authorities, which means it needs to be used under human supervision and has been subject to recall orders and government investigations into its technological capabilities in the US market.

Elon Musk announced that he will launch his long-promised autonomous robot taxi on August 8th, Tesla's new electric vehicle will be based on the upgraded latest FSD full self-driving technology, creating a Tesla unmanned electric taxi.

Cathie Wood, known as the "number one fan of Tesla" and a "staunch supporter of Musk," believes that Tesla's market value is expected to exceed $8 trillion. "Wood Sister" Cathie Wood, who founded and leads Ark Investment Management, recently updated her target price for Tesla. Ark expects Tesla's stock price to reach $2600 by 2029. Ark's bullish logic on Tesla is that by 2029, nearly 90% of Tesla's market value and profits are expected to come from the Robotaxi taxi business built on incredibly powerful AI supercomputers.

Ark is increasingly confident in Tesla's ability to launch a robotaxi network in the next five years. The institution believes that each of Tesla's vehicles in the future will become a cash flow generating machine driven by artificial intelligence, and Tesla's business model is expected to shift from one-time car sales to recurring sales revenue.

The end of AI is electricity! Tesla will fully benefit from the surge in power consumption in the future

For Morgan Stanley analyst Adam Jones, who has the title of "Tesla Bull," what may attract investors the most in Tesla's future is the company's solar and energy storage business.

On June 25th, Morgan Stanley released a research report stating: Tesla holds a "key AI card" and may become the core beneficiary of the next wave of AI investment frenzy. This "AI card" is not Tesla's FSD or Robotaxi robot taxi business, but Tesla's solar and energy storage business.

In its latest delivery report, Tesla also disclosed energy storage data. In the second quarter, Tesla deployed a total of 9.4 gigawatt-hours of energy storage, its best quarter ever. Jones, a Tesla bull from Morgan Stanley, is bullish on Tesla's energy storage business and believes that the surge in data center power demand brought about by the frenzy of global enterprises investing in AI will make Tesla a key player in the US energy market Since the beginning of this year, the strongest performing categories in the US utility sector have been concentrated in electricity stocks and renewable energy stocks. The main logic behind this is that these two subcategories are seen as one of the biggest beneficiaries of the unprecedented wave of global enterprise layout in AI. After all, the exponential expansion of high-energy-consuming AI data centers due to the fierce demand for AI chips cannot be separated from the large-scale electricity supply infrastructure. This is also the origin of the market mainstream view that "the end of AI is electricity".

According to forecast data from the Boston Consulting Group, the share of data centers in electricity consumption in the United States alone is expected to double, from 126 terawatt-hours in 2022 to 390 terawatt-hours in 2030. Terawatt-hours are used to describe the largest levels of electricity consumption, typically used for national energy statistics, planning, and evaluation of large energy projects. Large industrial facilities, such as super steel plants, may consume less than 10 terawatt-hours of electricity in a year.

The incredibly strong demand for solar energy and other renewable energy sources in global data centers is mainly due to the global decarbonization trend, where solar energy and other renewable energy sources may become the most important source of electricity generation, if not the only one. In the long term, Tesla's energy storage equipment needed for storing large-scale solar energy will undoubtedly play a core role similar to a "shovel seller".