By Medha Singh
(Reuters) -Morgan Stanley raised its valuation for Tesla (NASDAQ:TSLA)'s energy storage business, expecting a global surge in demand for power driven by the artificial-intelligence boom, and the company's ability to grow its market share in the segment.
The brokerage lifted the value of the unit at $50 per share of its $310 price target, up from its previous estimate of $36 apiece, while reducing its forecast for Tesla's 2030 auto sales.
It estimates that the profit generated from a fully utilized megafactory, which manufactures large-storage batteries, is equal to that from selling 1 million Tesla vehicles.
"It's no wonder that investors are starting to consider the real possibility that Tesla Energy may be worth more than Tesla Auto," Morgan Stanley (NYSE:MS) analyst Adam Jonas said.
Tesla shares have surged nearly 44% in the past 10 sessions, their longest streak in more than a year, after a dour start to the year.
The daily trading turnover for Tesla shares overtook AI darling Nvidia (NASDAQ:NVDA) last week for the first time in six months, per LSEG data.
Oppenheimer said in a note on Tuesday it expects to see Tesla's energy storage sales to surpass $3 billion in the current quarter, but added that "the value of its full-self driving /AI platform is the key to whether shares will continue moving higher or begin to moderate again."
In April, CEO Elon Musk said Tesla would likely launch full-self driving software this year, which would be a big profit generator.
Tesla deployed 9.4 gigawatt hours of energy storage products in the second quarter of 2024, more than double of that in the January-March period.
Its products include the Powerwall home power backup system, and Megapack, meant for large-scale commercial projects and utilities.
Energy storage and generation accounted for 6% of Tesla's 2023 revenue, and the rest came from the auto segment, according to LSEG data.