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Tesla’s Supercomputer Dojo Could Propel a $500 Billion Market Boost

Morgan Stanley's bullish report suggests Tesla's Dojo supercomputer, with its in-house AI ASIC chip, could lead to a $500 billion market capitalization surge, reshaping the semiconductor landscape

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Morgan Stanley unveiled some optimistic projections for Tesla on Monday. At the heart of their positive sentiment? Semiconductors.

Yesterday, Tesla’s stock surged by 9.5%, largely driven by a research report from Morgan Stanley. The bank shifted Tesla’s rating from ‘equalweight’ to ‘overweight’ and increased the price target from $250 to $400. In simpler terms, Morgan Stanley foresees Tesla outpacing its market competitors.

The primary force behind this upgrade is Tesla’s Dojo supercomputer. According to Morgan Stanley’s researchers, Dojo might be the catalyst for a staggering $500 billion surge in Tesla’s market capitalization. They believe Tesla isn’t just excelling in the auto sector but is also poised to make significant inroads in the software realm.

In their report, the analysts emphasized, “Tesla’s breakthrough supercomputer architecture is redefining the capabilities of custom silicon, potentially positioning Tesla at a distinct advantage in a market valued at $10 trillion.”

Is Dojo Superior to NVIDIA?

While Dojo has been under development for half a decade, Tesla announced its operation commencement from July this year. Elon Musk is dedicated to investing a whopping billion dollars into this endeavor within the upcoming year.

Tesla already boasts a supercomputer powered by NVIDIA’s robust chips. However, the distinguishing factor for Dojo is its in-house developed chips. Morgan Stanley’s contention is that even though Tesla is not the pioneer in semiconductor creation, its AI ASIC chip could be a game-changer in the market.

This unique chip purportedly surpasses competitors in performance and cost-effectiveness. In a direct comparison, Morgan Stanley envisions the Dojo chip outstripping NVIDIA’s A100 GPU units in efficiency while also being more energy and cost-efficient.

For several years, Tesla has relied on AI chips from NVIDIA, the global chipmaking leader. Estimates suggest Tesla possesses over 10,000 NVIDIA A100 GPU units. However, with NVIDIA’s chips becoming scarce and demand skyrocketing, Musk remarked in 2021, “Given enough GPUs from Nvidia, we might not have pursued Dojo. However, their extensive clientele prevents them from meeting our needs.”

What’s the Hype About Dojo?

The tech community has been buzzing about Dojo for quite some time. The supercomputer is now operational and anticipated to rapidly evolve in power. It might soon join the ranks of the top five supercomputers globally. But what’s Dojo’s primary function?

Primarily, Dojo is engineered to refine the full-self-driving (FSD) system in all Tesla cars and support Tesla’s Autopilot. As it reaches its peak potential, it’s designed to process vast amounts of data, including video feeds from Tesla cars.

With over 4.5 million cars sold, Tesla possesses an immense data reservoir, pivotal for honing self-driving functionalities. This vast data pool underscores the importance of Dojo’s processing prowess.

As Forbes highlighted, “Dojo, built entirely in-house, furnishes Tesla with the autonomy to speed up developmental cycles. This could lead to rapid advancements in self-driving tech and potentially other AI areas, including Tesla’s AI-driven robots.”

Morgan Stanley’s insights also draw parallels between the dynamics that bolstered Amazon’s AWS to account for 70% of its operating profit and the forces that might push Tesla upwards. But it’s worth mentioning a potential bias: Morgan Stanley has been a trusted advisory firm for Musk, even assisting in the $44 billion acquisition of Twitter, now renamed X, as reported by the Financial Review.

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