Tesla hits new highs as BofA raises price target to $400

Shares of Tesla (TSLA, Financial) rose 2% in premarket trading on Thursday, nearing a 52-week high, after companies including Bank of America Securities raised their price targets. This optimism was due to Tesla’s new focus on robotics and artificial intelligence, which are said to be central to Tesla’s long-term development plan.

Bank of America raised its price target to $400 due to Tesla’s humanoid robot Optimus potentially impacting its business. Optimus is currently used in Tesla’s energy storage division and is expected to play a prominent role in the production of the CyberCab, which Tesla plans to unveil in 2022.

The company’s CEO, Elon Musk, stressed that the company’s focus on artificial intelligence (AI), such as the Dojo supercomputer and autonomous systems, is critical to its long-term prospects. This year, the company committed $10 billion in capital investments to accelerate these actions. Especially given that Tesla currently has a market cap of $1.1 trillion, analysts believe Tesla can use its current market cap to fund further robotics and computing scaling. Morgan Stanley’s generous forecast is 70 digits higher, putting Tesla’s market cap at $1.6 trillion if AI and robotics plans complement the market tilt. This shows that investors naturally trust that Mr. Musk and Tesla will shift from electric cars to technology and innovation.

This article first appeared on GuruFocus.