JPMorgan has upgraded Tesla’s stock rating to ‘neutral’ from ‘underweight,’ citing the company’s strengths in artificial intelligence and its vertically integrated supply chain. Analyst Rajat Gupta believes Tesla’s automotive factories serve as an effective ‘test bed’ for its Optimus humanoid robots, validating them at an industrial scale and potentially lowering costs.
This upgrade occurs amidst heightened anticipation for SpaceX’s potential IPO, while also touching upon broader market trends favoring AI companies and speculation about a Tesla-SpaceX merger.
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JPMorgan has shifted its stance on Tesla, upgrading the electric vehicle giant's stock rating from 'underweight' (equivalent to 'sell') to 'neutral.' The move, detailed in a Friday note to investors, comes after years of maintaining a sell rating and highlights the firm's newfound optimism regarding Tesla's integrated supply chain and its advancements in artificial intelligence, particularly in robotics.
Analyst Rajat Gupta of JPMorgan emphasized that the synergy between Tesla's various business units, including automotive and robotics, has been underestimated. He noted that using its existing automotive production facilities as a testing ground for its Optimus humanoid robots could not only reduce costs for the core auto business but also validate the robot's performance at an industrial scale.
This upgrade precedes a significant event for another of Elon Musk's ventures, SpaceX. The aerospace company is reportedly preparing for a highly anticipated initial public offering (IPO) on June 12, aiming for a staggering $1.8 trillion valuation and a $135 share price. This potential IPO could be the largest in history, with significant allocations expected for retail investors.
Ahead of the SpaceX debut, Wall Street firms, investment funds, and major stock indexes have been maneuvering to gain favor. While some indexes like Nasdaq and FTSE Russell have adjusted rules to facilitate expedited entry for large companies, S&P Dow Jones Indices stated on Thursday that it would not alter its entry requirements for major indices like the S&P 500 or Nasdaq 100. S&P cited a policy against granting exceptions solely based on market capitalization, a decision that may represent a setback for SpaceX's index inclusion hopes.
Speculation also continues regarding a potential merger between SpaceX and Tesla, a move suggested by industry observers as strategically beneficial. Ray Wang, CEO of tech advisory firm Constellation Research, commented to CNBC on Friday that such a merger could create a $3.5 trillion company, leveraging Musk's 82% control of Tesla's stock.
