Up 37% in five days, Tesla fans are "ecstatic": this is a "watershed" moment

After Elon Musk's unexpected visit to China last week, news about Tesla's Full Self-Driving (FSD) technology landing in China has been spreading rapidly, causing the market's enthusiasm for Tesla's stock to soar.

In the overnight US stock market, Tesla's stock opened with a 12% jump, reaching over 18% at one point during the trading session, and closing with a strong 15.3% increase. Over the past five days, Tesla's stock price has accumulated a 37% increase, marking the best five-day gain since August 2020.

Long-time Tesla bull and Morgan Stanley automotive analyst Adam Jonas wrote in a report to clients:

Elon Musk's visit to China signifies much more than just the advancement of FSD in China. As Tesla's CEO, whether Musk is sleeping on the floor or on a plane... the message is clear: he is back.

Musk is Back!

Jonas mentioned that due to Musk's valuable time spent on the so-called "anti-awakening movement" on the Musk X platform, investors are increasingly concerned about whether he can fully dedicate himself to Tesla. The analyst believes that Musk's weekend visit to China is a "commitment" to Tesla.

Even a small commitment (such as Musk's unannounced visit to China this time) carries significant meaning here, helping dispel investors' doubts about whether Musk is fully committed to Tesla, compared to his broader company ecosystem (such as SpaceX, X.AI, etc.).

Notably, the report also includes a profound philosophical conclusion:

The artificial intelligence brain is seeking its robot "body." And this body is the vessel that carries the "soul" of artificial intelligence.

Jonas believes that regardless of the direction Tesla will take in the future, investors can still favor this company because it has already begun integrating general artificial intelligence with robotics technology.

For a long time, people have viewed large language models and robots as two completely different scientific fields. However, the progress of large language models may accelerate the training and learning process of "robots," whether in the form of "car-shaped" robots or "human-shaped" robots.

A "Turning Point" Moment Approaching?

Wedbush analyst Dan Ives, also a superfan of Tesla, wrote in a report released on Monday that Musk's trip to China is a "home run."

Ives added that the landing of FSD in China will be a "watershed moment" in Tesla's narrative.Tesla is facing demand challenges in China, and Wall Street is going through this painful transition period, hoping that Musk's company can achieve long-term growth, with FSD being a key factor for its success.

Jonas also believes that if FSD successfully lands in China, it will dispel market doubts about Tesla's profits in the Chinese market.

Ive has set the target price for Tesla stock at $275, with a rating of outperforming the market. Jonas is more optimistic about Tesla stock, maintaining a buy rating with a target price of $310.

It is worth noting that on the day Musk arrived in China, Tesla passed the Chinese automotive data security compliance requirements. According to media reports, Tesla will cooperate with Baidu in China on map and navigation functions.

A CICC research report pointed out that if FSD is promoted in China, the entire data loop needs to be domestic, preparations need to be made in data collection and model training, and consideration should be given to whether the BEV perception solution can be well localized. In China, FSD mapping may require cooperation with Chinese manufacturers, and Tesla needs to establish a local computing center and set up a local algorithm adaptation team.

"The Largest AI Project on Earth"

Tesla's biggest fan on Wall Street, known as "Wood Sister," Cathie Wood, commented on the social platform X last weekend that what Tesla is doing is "the largest AI project on earth."

Wood wrote that she believes Tesla's artificial intelligence investment "is setting it apart from car and tech companies."

Wood is optimistic about Tesla in the long term, believing in the long-term value of fully autonomous driving and Robotaxi. As Tesla's stock price approached a 52-week low, Wood bought a large amount of Tesla stock before the first-quarter earnings report was released.

Wood often buys a large amount of Tesla stock when the price is at a low point. As of April 29, Tesla stock is the largest holding of Wood's ARKK fund, accounting for 10.95% of the portfolio.

All in AI?

In recent weeks, Musk has been increasing his promotion of FSD and artificial intelligence. Musk stated on the first-quarter earnings call that "autonomous driving" is Tesla's current top priority.

Due to an investment of $1 billion in "artificial intelligence infrastructure" and plans to launch a robot taxi service on August 8, Tesla's free cash flow in the first quarter was negative $2.5 billion.

Over the weekend, Musk stated on the X platform that Tesla will invest around $10 billion this year in AI training and inference, with inference mainly used for cars.

Musk said:

Any company that does not invest at this level and cannot efficiently invest will not be able to compete