Morgan Stanley: The market has underestimated the significance of xAI for Tesla. FSD 14.3 may become the "steam engine moment" for autonomous driving.

```

While the entire market's attention is focused on Musk's astronomical compensation, Morgan Stanley points out that the strategic highlights of Tesla's shareholder meeting have been overlooked.

According to ZF Trading Desk, Morgan Stanley analyst Adam Jonas stated in a recent report that shareholders' approval of Musk's staggering compensation package was already expected, but this is just noise. The true value of the report lies in its revelation of several key signals that have been ignored by the market, yet will profoundly impact the stock price in the next 6-12 months.

Morgan Stanley believes that Tesla’s relationship with xAI, the breakthrough progress in Full Self-Driving (FSD), the vertically integrated chip strategy, distributed inference cloud network, space AI satellites, and the revolutionary manufacturing model of Cybercab, will all reshape Tesla’s long-term value. These strategic layouts go far beyond the scope of traditional automakers, pointing toward an AI-driven "Muskonomy."

Morgan Stanley maintains an "Overweight" rating on Tesla and sets a target price of $410. Tesla closed at $445.23 overnight, and in a bull case, the target price could reach up to $800.

The Cornerstone of the "Muskonomy": xAI and Chip Independence

The report points out that the market has not truly understood the symbiotic relationship between Tesla and xAI.

The Morgan Stanley report emphasizes:

The relationship between Tesla and xAI (financially and strategically) is decisive for Tesla’s long-term success… We believe that as Tesla enters the next stage of physical AI/autonomous driving in the coming year, this co-decisiveness will become even more apparent.

Morgan Stanley believes that the two companies form a recursive loop in data, software/hardware, and manufacturing, with a value system rooted in the same creator. This deep integration is decisive for the future success or failure of Tesla’s physical AI and autonomous driving.

At the same time, to support the massive plan of billions of robots (cars, humanoid robots, etc.), Musk hinted that Tesla may personally build a "giant chip factory" to ensure the supply and innovation of the most valuable resource of this "robot brain." The most important part of a robot is the inference brain, and Tesla hopes to achieve some degree of vertical integration in inference chip manufacturing.

At the shareholder meeting, Musk's confidence that FSD V14.3 will realize "texting while driving" won applause comparable to when the compensation package was passed. Morgan Stanley believes the market underestimates the significance of this moment.

Shifting the driving responsibility from humans to a pure vision algorithm is the "steam engine moment" in the transportation sector, a historic technological breakthrough point. This is not only technological progress, but a fundamental change in the way we travel.

In addition, Musk proposed a stunning concept—a "massive" distributed inference cloud.

If you allow Tesla to use your car for AI inference computing when you're not using it, we are willing to pay you $100 or $200 a month. In the U.S. alone, there are over 300 million vehicles, and over 1.2 billion worldwide. If they all possess computing power equivalent to Nvidia’s Blackwell GPU, it would form an unprecedentedly large edge computing network to help relieve data centers. Just in the U.S., that would be more than 300 million Blackwells. Globally, it would reach 1.2 billion, and possibly as many as 2 billion in the next 15 years.

The Ultimate Blueprint: Space Computing and Disruptive Manufacturing

The report also catches two “Easter eggs” pointing towards the future. One is the “solar AI satellite” mentioned by Musk, which hints at strategic collaboration between Tesla and SpaceX in the area of space computing.

The "solar AI satellite" has attracted a lot of attention from Morgan Stanley's embodied AI and space teams. Analysts point out:

They have long discussed the natural overlap between advanced computing and secure network communications in space. Space data centers are far from science fiction—they are a necessary technology to meet humanity’s demand for computing power and electricity. Computers require cooling environments, and the baseline temperature of outer space is 2.7 Kelvin (-270.45 Celsius, -454.8 Fahrenheit), giving it an obvious thermal dissipation advantage.

The second is Cybercab’s production goal—“one vehicle every 10 seconds,” far surpassing the traditional auto industry’s 60-90 second takt time, thanks to disruptive innovations such as "boxless" production lines, minimalist design, and paint-free processes. This heralds another great leap forward in automotive mass production since Henry Ford. Specifically, Tesla hopes to:

Adopt a new "boxless" production line, minimalist approach, and almost zero customization/differentiation between models. No steering wheel, no rearview mirror, snap-fit plastic composite body panels with pre-coated layers (possibly eliminating the need for a paint shop).

Risk Warning and DisclaimerThe market has risks, and investment should be cautious. This article does not constitute personal investment advice, nor does it take into account the special investment goals, financial situations, or needs of individual users. Users should consider whether any opinions, ideas, or conclusions in this article are suitable for their particular situation. Investment based on this is at your own risk. ```