Bank of America: “Optimus Accounts for Just a Small Portion of Tesla’s Computing Power, Anticipating Growth as Robotaxi Technology Advances”

Disclaimer: The information provided in this article does not constitute investment advice. The author holds no positions in the stocks discussed herein.

Tesla’s Optimus Robot Gains Wall Street Attention

Despite ongoing skepticism surrounding Tesla’s development of its bipedal robot, known as Optimus, the narrative appears to be shifting. Previously dismissed by critics as a mere distraction, seasoned analysts on Wall Street are beginning to recognize the significant market potential Optimus represents for Tesla, prompting an increase in the company’s stock price target.

JUST IN: TESLA $TSLA PRICE-TARGET RAISED TO $400 (FROM $350) AT BANK OF AMERICA — ANALYST SAYS “OPTIMUS IS REAL AND DEVELOPMENT IS POISED TO ACCELERATE”

“Optimus is currently used by TSLA to sort 4680 cells with no intervention. TSLA is testing Optimus in various use cases… pic.twitter.com/qC6L15UJTg

— Stock Talk (@stocktalkweekly) December 5, 2024

Analyst Insights on Optimus Development

John Murphy, an analyst at Bank of America (BofA), has recently shared insights outlining the potential upside for Tesla stock driven by the ongoing development of the Optimus robot. Murphy emphasizes that Tesla has already integrated Optimus into its operations, utilizing the robot for straightforward tasks on the factory floor, such as sorting 4680 battery cells autonomously.

Testing and Future Capabilities

In addition to its current applications, Tesla is actively exploring various use cases for Optimus, including activities as intricate as catching a tennis ball. This exploratory phase aims to refine the robot’s design and operational efficiency.

“Optimus accounts for only a single-digit percentage of TSLA’s compute, but we expect the resources available for Optimus will grow as the robotaxi technology matures,”Murphy stated.

Projected Robot Deployment and Resource Allocation

Tesla has ambitious plans to implement approximately 1,000 Optimus units in its factories by the close of 2025. This strategic deployment is expected to enhance the compute resources dedicated to the robot, facilitating a more robust developmental framework.

Murphy anticipates that this realignment of resources will not only accelerate Optimus’s capabilities but also boost production rates by 2026 and beyond, subsequently reducing operational costs.

Stock Price Target Increase

Reflecting this optimistic outlook, Murphy has elevated BofA’s stock price target for Tesla from $350 to $400. This adjustment signals an estimated upside of approximately 11 percent from Tesla’s current trading price of $358.

The Technological Advancements of Optimus

For those unfamiliar, Optimus is designed with a neural network-driven AI system, enabling it to efficiently interact with its environment. Currently, the bipedal robot performs various labor-intensive tasks, boasting advanced AI capabilities that are still under development. Optimus utilizes a sophisticated neural network to navigate obstacles and track moving objects seamlessly. Notably, it is equipped with sensitive tactile sensors, allowing it to handle delicate tasks, such as grasping an egg.

Future Revenue Projections

Looking ahead, Deutsche Bank projects substantial revenue generation from Optimus, estimating that the robot could contribute around $10 billion annually by 2035. This forecast is based on expected sales of 200,000 units, each priced at an average of $50,000.

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