Tesla’s current risks priced in, but future potential 'greatly underestimated': MS

Published 08/04/2025, 12:36
© Reuters.

Investing.com -- Investors are well familiar with current business pressures at Tesla (NASDAQ:TSLA), but a Morgan Stanley (NYSE:MS) analyst argues that the long-term opportunity tied to the company’s advanced technology capabilities is still “potentially greatly underestimated.”

The bank’s equity analyst Adam Jonas maintains Tesla as a Top Pick with an Overweight rating and a $410 price target. That valuation reflects what Jonas says is a much broader growth story than just electric vehicles (EVs).

“Tesla's capabilities in key areas of physical AI including data, robotics, energy storage, compute, manufacturing and space/comms/networking/infrastructure offer growth and margin opportunities that greatly exceed those of the traditional EV business which is under pressure,” the note said.

The analyst sees Tesla playing an increasing role beyond consumer markets, especially as the development of autonomous systems begins to intersect with national security interests.

He highlights the growing investor awareness around the “dual-use of autonomy,” adding that Tesla's role in defense-tech and government-related applications may become more apparent through milestones expected in 2025.

Jonas frames this transition in the context of a broader industrial shift where AI moves into the physical world, reshaping the definition of production itself.

“The ability to ‘produce’ labor in a factory… as machines make machines with minimal human intervention may alter historical measurements such as dependency ratios, retirement age and GDP per capita,” he writes.

Jonas believes that recurring concerns over EV demand, competition, and operational execution are already well-priced into the stock.

On the other hand, the company’s role in the emergence of embodied AI — through autonomous vehicles and humanoid robots — is far from fully appreciated by markets.

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