Morgan Stanley firmly bullish on Tesla's humanoid robot, which may ignite rare earth demand
Morgan Stanley gave Tesla an "Overweight" rating with a target price of $410, believing that the stock remains a top choice. The report mentioned that Tesla's leadership in the electric vehicle and AI humanoid robot sectors will drive the growth of rare earth demand. It is expected that by 2050, humanoid robots will increase the demand for critical minerals by approximately $800 billion. Tesla's stock price rose by 6.94%, closing at $362.89
According to Zhitong Finance APP, Morgan Stanley recently released a research report, giving Tesla (TSLA.US) an "Overweight" rating with a target price of $410, making it still a preferred stock.
Morgan Stanley stated that the $410 target price is based on the valuation of Tesla's various businesses, with the core automotive business valued at $75 per share, the network services business valued at $160 per share, the mobility services valued at $90 per share, the energy business valued at $67 per share, and the third-party supply business valued at $17 per share.
Tesla is a leader in the global electric vehicle and autonomous driving, as well as AI humanoid robot fields. Therefore, Morgan Stanley also discussed the development of humanoid robots and the rare earth metal supply chain in the report.
Morgan Stanley indicated that China dominates the mining and refining of rare earths, controlling 65% of rare earth mining and 88% of rare earth refining, which makes it urgent for Western producers to diversify their supply chains. Morgan Stanley noted that, for the foreseeable future, the U.S. seems likely to continue relying on China's rare earths. The average cycle for developing new mines continues to extend, which may make it difficult to meet the growing demand for critical minerals.
The embodied AI/humanoid robot revolution will further highlight supply/demand risks. Each humanoid robot contains about 0.9 kilograms of rare earth metals on average. Humanoid robots could significantly increase the demand for critical minerals, especially rare earths. Morgan Stanley expects that demand for humanoid robots will begin to accelerate from 2035, and by 2050, humanoid robots could cumulatively increase the demand for critical minerals by about $800 billion.
In terms of potential supply sources, data from the U.S. Geological Survey shows that global rare earth reserves exceed 90 million tons, with about 48% in China, and significant exploitable reserves in Brazil (23%), India (8%), and Australia (6%).
As of Tuesday's close, Tesla rose 6.94% to $362.89. The stock has recently rebounded, narrowing its year-to-date decline to 10%
