Tesla’s Dojo supercomputer could fuel a $500 billion jump

Morgan Stanley released a report Monday, predicting a semiconductor-driven hopeful outlook for Musk's company.
Sejal Sharma
Tesla CEO Elon Musk
Tesla CEO Elon Musk

Wikimedia Commons 

Tesla’s shares were up 9.5 percent yesterday. But what drove them up?

A Morgan Stanley research report.

The investment banking firm issued a research note that upgraded the Elon Musk-owned automotive company’s rating from 'equalweight' to 'overweight' with a price target of $400 from a prior price target of $250. An ‘overweight’ rating means that the analysts, in this case Morgan Stanley (MS), expects Tesla’s stock to outperform its industry in the market.

The catalyst for this increase in rating is Tesla’s Dojo supercomputer, which the team of MS researchers believe can fuel a $500 billion jump in the company’s market value, reported CNN. The report calls out Tesla’s ability to not only preside over the auto market but also the software market. 

“Tesla has developed an advanced supercomputing architecture that pushes new boundaries in custom silicon and may put Tesla at an asymmetric advantage in a $10trn TAM,” wrote the MS analysts in their report.

Better chip than NVIDIA?

Although Dojo has been in the works for the last five years, Tesla said it began operating the supercomputer in July this year. Musk also committed to spending a billion dollars to build the supercomputer over the next year.

While the automaker already has a supercomputer powered by NVIDIA’s powerful chips, Dojo will have chips built in-house by Tesla. MS argues that although Tesla isn’t the first company to develop a semiconductor chip, its AI ASIC chip gives it a competitive edge. 

Tesla’s chip reportedly operates better than any other chip on the market and is more cost-efficient. Morgan Stanley believes the Dojo chip will outperform NVIDIA’s A100 GPU boxes while reducing costs and energy consumption.

NVIDIA, the number one chipmaker in the world, has been supplying Tesla with AI chips for the last few years. It's believed Tesla has over 10,000 NVIDIA A100 GPU units. But NVIDIA's chips are in short supply, and the demand is ever-increasing.

"We'll actually take the hardware as fast as Nvidia will deliver it to us," Musk said in 2021. "If they could deliver us enough GPUs, we might not need Dojo, but they can't because they've got so many customers."

The Dojo

Tesla has been talking about Dojo for the last couple of years. Currently, Dojo is online and is expected to grow in power at an unprecedented rate. It is expected that Dojo will someday be counted in the world’s top five most powerful supercomputers. But what exactly does Dojo do?

Dojo has been built to train the full-self-driving (FSD) system inside every Tesla car. It also assists Tesla’s driver-assistance system, Autopilot. Once it starts running at its full potential, the supercomputer will have the capacity to analyze enormous volumes of data, including videos from Tesla vehicles.

Tesla has sold 4,527,916 cars. Each car gives Tesla the data they need to develop full self-driving capabilities. That means Tesla is hoarding gargantuan amounts of data from its millions of customers. And that’s where Dojo’s processing capabilities come in.

“Being developed entirely in-house, Dojo provides Tesla with the kind of control that can lead to accelerated development cycles, thereby fast-tracking innovations in autonomous vehicles and possibly other domains of AI, including the computer vision-powered robots Tesla is working on,” noted Forbes in its report.

The Morgan Stanley report further says that the forces that have driven AWS to contribute to 70% of Amazon’s operating profit will be the same forces that drive Tesla’s upward mobility. However, it should be noted that MS is one of Musk’s key advisory firms, including on the $US44 billion takeover of Twitter, now known as X, reported the Financial Review.

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