Morgan Stanley Analyst Sees a Bright Future for Humanoid Robotics Highlighted by Tesla’s Optimus Project

Published March 16, 2024

Tesla Inc (NASDAQ: TSLA), known for its trailblazing electric vehicles, has captured the interest of Morgan Stanley analyst Adam Jonas with its foray into humanoid robotics, specifically with the development of the Optimus robot. Jonas, a proponent of Tesla's ambitions, forecasts that the field of humanoid robotics will experience rapid advancement in the coming months and years.

Increasing Investments in Robotics

Jonas points to the recent headlines about Figure AI's substantial funding round, which saw contributions from industry heavyweights like Jeff Bezos, Nvidia, Microsoft, and OpenAI, totaling around $675 million. He also observes the Chinese government’s growing involvement in promoting humanoid robotic technology as a sign of the sector's burgeoning importance.

Tesla's Pioneering Steps with Optimus

Tesla's Optimus project marks the company’s entry into this sector. Optimus, a humanoid robot designed to handle tasks deemed unsafe or uninteresting for humans, was first introduced in 2021. Recently, Tesla revealed footage showing Optimus in action, which indicates improved stability and movement.

Elon Musk, Tesla's CEO, shared his ambition to start delivering Optimus units as early as the next year. Despite cautioning about the uncertainties in product development, Musk conveyed his belief in Optimus potentially becoming an incredibly valuable product.

The Shift from Autonomous Vehicles to Robotics

Jonas attributes part of the growing interest in humanoid robots to the AI revolution, combined with the plateauing of autonomous vehicle development. As this shift occurs, talents originally focused on autonomous vehicles are pivoting to humanoid robotics, which is gaining traction as a discipline with significant potential for impact.

According to the analyst, the transition to robotics could help address the shortfall in the workforce exacerbated by the pandemic, as approximately 1.7 million Americans remain out of the labor force.

Financial Outlook

Adam Jonas maintains an “overweight” rating on Tesla with a $320 price target. This optimistic valuation, however, does not include the potential revenue from the Optimus project.

Despite a 34.16% dip year-to-date, Tesla shares have seen a slight increase recently. Continuous updates on projects like Optimus may affect the company's stock performance in the future.

Tesla, robotics, investment