JPMorgan has upgraded Tesla’s stock rating to ‘neutral’ from ‘underweight,’ citing the company’s leadership in physical AI and its advanced, vertically integrated supply chain. Analyst Rajat Gupta believes Tesla’s progress with its Optimus humanoid robots, leveraging its existing factories, is a key, underappreciated factor.
The upgrade comes as anticipation builds for the potential mega-IPO of Elon Musk’s SpaceX, with market observers also speculating about a possible merger between SpaceX and Tesla, a move that could create a company valued at $3.5 trillion.
JPMorgan Upgrades Tesla to 'Neutral,' Citing AI Leadership and Integrated Supply Chain
By Rajat Gupta (Analyst), Ray Wang (CEO, Constellation Research)
Published: June 7, 2024
Tesla at the Forefront of Physical AI, Says JPMorgan
JPMorgan has removed its 'sell' rating on Tesla, upgrading the electric vehicle and clean energy giant to 'neutral' from 'underweight.' The significant shift, which comes after maintaining a sell-equivalent rating since July 2023, is driven by JPMorgan's recognition of Tesla's advanced artificial intelligence capabilities and its robust, vertically integrated supply chain. The firm believes Tesla is at the 'forefront of physical AI.'
JPMorgan analysts see Tesla's integration of AI across its business units as a key differentiator.
In a note to investors, JPMorgan analyst Rajat Gupta highlighted that the synergy between Tesla's diverse business units, including automotive and robotics, has been "under-appreciated and misunderstood." Gupta posited that using vehicle production factories as a testing ground for its Optimus humanoid robots could not only reduce costs for the automotive division but also validate the product at an industrial scale.
SpaceX IPO Buzz and Potential Tesla Merger
This upgrade occurs amidst significant anticipation for the initial public offering (IPO) of SpaceX, another company led by Tesla CEO Elon Musk. SpaceX is slated to debut on the Nasdaq on June 12, aiming for a staggering $1.8 trillion valuation and a $135 share price, which could mark the largest IPO in history. The impending SpaceX IPO has led to market participants and index providers reassessing their rules for inclusion, with some making expedited entry easier for large companies. However, S&P Dow Jones Indices has stated it will not grant exceptions to its entry requirements based solely on market capitalization.
Adding to the market's intrigue is the possibility of a merger between SpaceX and Tesla. Ray Wang, CEO of tech advisory firm Constellation Research, commented on CNBC, suggesting such a move would be "very smart" and could create a $3.5 trillion company, leveraging Musk's significant control over Tesla's stock.
Analyst calls surrounding major tech companies like Nvidia and Tesla continue to shape market sentiment.
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