Major Bank Ratings | Morgan Stanley: Tesla's transformation expected to increase operating and capital expenditures, target price lowered to $415

Glonghui, January 29｜A research report by Morgan Stanley indicates that Tesla's future focus lies in transitioning to the physical artificial intelligence sector, with the core of this transformation being an increase in capital intensity, as the company is making significant investments in its physical infrastructure and computing power. The bank expects operating expenses to remain high, projected to account for 14.5% of sales in 2026 (13% in 2025); capital expenditures are also expected to rise, estimated to reach $21 billion this year, higher than the company's guidance of over $20 billion. The bank has lowered Tesla's target price from $425 to $415, reflecting downward adjustments of 5% and 10% in adjusted EBITDA forecasts for 2026 and 2027, respectively, as well as increased cash burn resulting from accelerated capital expenditures, with a rating of "in line with the market." Although the growth in capital expenditures will help the company maintain its leadership position in the physical artificial intelligence sector, the high level of cash burn may limit its short-term valuation multiple expansion.