Updated at 9:45 AM EST
Tesla shares moved higher in early Thursday trading, hitting a fresh one-year peak, following a price target upgrade from a top Wall Street analyst tied to its investments in next-generation robotics.
Tesla ( TSLA ) shares have gained more than $340 billion in market value over the past month, rising around 42.4% on bets that CEO Elon Musk's support for President-elect Donald Trump, as well as his ties to the new administration, will prove favorable for the world's biggest EV maker.
Investors, however, have long valued Tesla's broader efforts in energy storage, self-driving technologies and robotics at much higher levels than its legacy automaking business, suggesting its future profits are more likely to be tied to developments in these divisions than to electric-vehicle production.
Morgan Stanley analyst Adam Jonas, in fact, says Tesla could reach a market value of around $1.6 trillion if his bull case for the stock comes to fruition and Musk's involvement with the new administration enables a repricing of its AI ambitions.
Musk himself touted the profit potential of AI technologies, particularly with respect to the group's ambition to offer self-driving software to its near 7 million global EV fleet, adding that capital spending would likely rise to around $10 billion this year as a result.
"We are going to double down on Dojo and we do see a path to being competitive with Nvidia with Dojo," Musk told investors in July, speaking of the supercomputer. "We've really got to make Dojo work and we will."
Humanoid robots
Bank of America Securities analyst John Murphy added his name to that list Thursday as he lifted his price target on Tesla by $50 to $400 a share, citing the impact robotics technology will have on the group's upcoming fleet of Cybercabs, which are expected to launch next year.
Tesla's Optimus humanoid robot, which is powered by the group's AI technology and, the group says, will perform repetitive physical tasks, is currently being used in a limited capacity in Tesla's energy-storage division.
Related: Top analyst updates Tesla stock price target - with a warning
Musk called Optimus "the most advanced humanoid robot by a long shot" during Tesla's late October earnings call. He said Tesla was the "only company that really has all of the ingredients necessary to scale humanoid robots."
"What other companies are missing is that they're missing the AI brain, that they're missing people to really scale to very high-volume production," Musk said. "I think Optimus will ultimately be the most valuable part, so I think [it] has a good chance of being the most viable product that we made."
BofA's Murphy said Tesla was testing Optimus in a host of use cases, as it looked to both refine the current version and determine its final design.
"Tesla plans to have 1,000 Optimus robots in use by the end of 2025, primarily within its plant operations," Murphy said. "With more robots in use, training will accelerate."
Optimus impact
That could mean robots such as Optimus will play a larger role in the Cybercab production ramp, which is expected to accelerate meaningfully in 2026. That move could reduce overall costs and boost profit margins.
"While Optimus currently accounts for only a single-digit percentage of Tesla's compute capacity, we expect the resources allocated to Optimus will grow as the robotaxi technology matures," he added.
Related: Tesla replaced by much smaller rival in EV charging project
"This increased focus will drive an acceleration in Optimus's capabilities and ultimately lead to increased production in 2026 and beyond, thereby helping to drive costs down," Murphy concluded.
More Tesla:
The analyst also added that Tesla could use its recent share price surge, which has taken the stock to fresh 52-week highs and a market value of just over $1.1 trillion, to raise new capital to fund its longer-term ambitions for Optimus and other high-tech strategies.
"The Optimus opportunity, among others, could potentially benefit from additional capital via an equity raise to fund greater compute capacity, which we believe would be well-received by most Tesla investors," Murphy said.
Tesla shares were marked 3.67% higher in early Thursday trading to change hands at $370.48 each.
Related: Veteran fund manager delivers alarming S&P 500 forecast
