Tesla's Deliveries Drop, But AI Push Keeps It a Top Pick!

Ladies and Gentlemen, buckle up! We're diving into the wild world of Tesla, Inc. (TSLA) where the ride is anything but smooth. Deliveries are down, but Morgan Stanley is still bullish on the AI and robotics revolution happening at Tesla. Let's break it down!

Tesla's Delivery Woes

First things first, Tesla's deliveries are in the dumps. Industry data shows a 45% drop in Europe in January 2025, while overall EV sales jumped 37%. Ouch! That's a tough pill to swallow. But here's the kicker: Morgan Stanley still sees Tesla as the top U.S. auto pick. Why? Because Tesla is pivoting from an automotive "pure play" to a highly diversified play on AI and robotics.



The AI and Robotics Revolution

Tesla's AI and robotics initiatives are the real deal. The company is developing AI-driven solutions in-house, allowing for greater control and customization of its technologies. This vertical integration enables Tesla to rapidly iterate and improve its AI systems based on real-world data collected from its fleet of vehicles.

Here are the key areas where Tesla is making waves:

1. Autonomous Driving: Tesla's self-driving technology relies heavily on AI, using neural networks to process visual data from cameras and sensors in real-time. The company's "imitation learning" approach allows its AI to learn from millions of human drivers, continuously improving its decision-making capabilities.

2. Manufacturing Optimization: AI is used to streamline production processes, enhance quality control, and automate repetitive tasks in Tesla's factories.

3. Dojo Supercomputer: This custom-built AI training system processes vast amounts of data to accelerate the development of Tesla's autonomous driving algorithms.

4. Robotics: Projects like the Tesla Optimus Gen-2 demonstrate the company's ambition to apply its AI expertise beyond vehicles, potentially revolutionizing industries beyond automotive.

Morgan Stanley's Bullish Stance

Morgan Stanley's analyst Adam Jonas is no stranger to bold Tesla predictions. In September 2023, he said Tesla's Dojo supercomputer could boost its market value by nearly $600 billion through advancements in robotaxis. Since then, Tesla's market value has risen by about $150 billion to nearly $950 billion.



The Road Ahead

Despite the current challenges, Tesla's AI advancements and software-driven approach remain game-changers. If Tesla successfully integrates AI into everything from manufacturing to autonomous driving, it could yield lucrative new revenue streams. Morgan Stanley still sees the possibility of a robust rebound for Tesla stock, with a potential surge up to 65% from its current value. This means a $10,000 investment might eventually grow to $16,500, indicating long-term investor confidence in Tesla's AI and robotics initiatives.

Conclusion

So, what's the bottom line? Tesla's transition from an automotive "pure play" to a diversified AI and robotics company could lead to short-term volatility and uncertainty, but it also holds the potential for long-term growth and innovation. Investors need to carefully monitor Tesla's progress in these new areas to assess the company's long-term prospects. But one thing is for sure: Tesla is still a top pick for those looking to ride the AI and robotics wave. So, buckle up and get ready for the ride of your life!