AI R&D Heats Up: Tesla Positioned to Benefit as Embodied AI Takes Center Stage
Recent advancements by DeepSeek, a Chinese AI startup, have sparked concerns among US tech investors about the competitive threat posed to American companies. However, this renewed focus on AI and its applications could prove advantageous for Tesla (TSLA).
DeepSeek's R1 Model: A Game-Changer for AI
Morgan Stanley analyst Adam Jonas highlights that DeepSeek's R1 reasoning model, which reportedly surpasses OpenAI's ChatGPT, has the potential to be a game-changer. This development raises questions about intensifying global AI competition and its implications for computational efficiency, national security, and policy.
Embodied AI: The Next Frontier in AI
Jonas emphasizes that "embodied AI," or the integration of AI into physical objects to enhance functionality, is a crucial aspect of the AI race. In particular, Jonas believes that advancements in embodied AI have sparked investor interest due to recent breakthroughs in generative AI (genAI) and supercomputing.
Tesla's EV Advantage for Embodied AI
For Tesla, AI advancements inspired by OpenAI, DeepSeek, or Tesla's own research will enhance self-driving capabilities and accelerate the deployment of Robotaxis. Jonas asserts that electric vehicles (EVs) are the "sockets" for embodied AI, making Tesla a key player in this emerging field.
Tesla's Visual Data Advantage
Jonas points out that just as chatbots require textual data to train language models, physical robots need visual data to train their vision, language, and actuation models. Tesla's extensive collection of visual data provides it with a competitive advantage in this area.
Optimus Robot: Tesla's Embodied AI Breakthrough
Jonas believes that embodied AI will power Tesla's Optimus robot, which has garnered significant interest from Tesla CEO Elon Musk. Musk has predicted that half a million Optimus robots could be in service by 2027, creating a trillion-dollar market opportunity.
National Security Implications
Jonas also notes that government focus on the potential applications of embodied AI in areas such as military drones could drive further investment and attention to the sector.
Morgan Stanley's Tesla Outlook
Despite the ongoing tech rout, Morgan Stanley maintains a Top Pick rating for Tesla in the automotive space and a $430 price target. The firm views Tesla's position in embodied AI and its strong EV market share as key factors driving its bullish outlook.