Morgan Stanley raises Tesla bull-case target to $840 on Semi software

Morgan Stanley analyst Andrew Percoco has raised the bull-case price target for Tesla to $840, driven by projected software revenue from the Tesla Semi rather than passenger vehicle sales. This adjustment is a scenario-based shift; the firm’s base case remains at $400 with an Equal-Weight rating.

The forecast is built on the potential for autonomous trucking software. Percoco suggests that once full self-driving is active on the Semi, Tesla could charge between 85 cents and $1 per mile. With a commercial Semi potentially traveling 18,000 miles per month, this could generate $12,000 to $18,000 in monthly software revenue per truck.

Morgan Stanley projects 82,000 Semis will be on the road by 2040, which could result in $17 billion in annual software revenue and $7.5 billion in incremental EBIT. However, the deployment of full self-driving for the Semi depends on successful implementation in high-volume passenger vehicles first. CEO Elon Musk has noted that current efforts are prioritized toward the Model 3 and Model Y due to the low number of Semi units currently in operation.