Rising star Tesla, Inc. (TSLA.US) can still soar? Morgan Stanley lowered the automotive industry rating, but firmly believes that Tesla, Inc. can continue to rise.

The Wall Street investment banking giant Morgan Stanley has downgraded the overall rating of America's Car-Mart, Inc. to "neutral" from its previous "strong buy" rating. Within the automotive industry, different companies are placed in different rating ranges, with Tesla, Inc. (TSLA.US) and Ferrari NV (RACE.US) still maintaining a "buy" rating from Morgan Stanley, while the American electric car newcomer Lucid Motor (LCID.US) has been downgraded to a "sell" rating. The Morgan Stanley analysis team, led by analyst Adam Jonas, warned in their report that the overall downgrade of America's Car-Mart, Inc. was driven by a combination of international, domestic, and strategic factors, which investors may not fully realize. Morgan Stanley now believes that the inventory of cars in the United States is on the rise, and many American households still cannot afford cars. In addition, credit losses and loan defaults among subprime consumers continue to rise. The team led by Jonas also emphasized that the growth engine in the Asian region has reversed, which is a negative sign for the automotive industry. Jonas and his team also expressed concerns that the optimism surrounding US automotive stocks as drivers and beneficiaries of the AI boom is being offset by worries about the significant capital commitments required for large-scale AI development, AI infrastructure, and the establishment of AI cloud computing/data centers. Some institutional investors seem to believe that the investments in AI so far outweigh the profit potential in the short to medium term. As part of the reset for America's Car-Mart, Inc., Morgan Stanley has downgraded several previously favored automakers, including Ford Motor Company (F.US), General Motors Company (GM.US), Rivian Automotive (RIVN.US), Phinia (PHIN.US), and Magna International (MGA.US) from "buy" to "neutral". Morgan Stanley holds a more optimistic view on the US automotive retail business and has upgraded the ratings of Group 1 Automotive (GPI.US), Lear Automotive (LEA.US), Penske Group (PAG.US), and AutoNation (AN.US) to "buy". The main point of the Morgan Stanley analysis team is that franchised dealerships can continue their multiple expansions as trends show a predictable decrease in car loan payment amounts. Furthermore, the Wall Street investment bank sees significant profit opportunities in the automotive industry. Morgan Stanley continues to maintain a "buy" rating for Tesla, Inc. (TSLA.US), Ferrari NV (RACE.US), and CarMax (KMX.US), as well as upgrading AutoNation (AN.US) to a "buy" rating. Tesla, Inc. remains Morgan Stanley's "top pick" for automotive stocks. They also maintain a "sell" rating for Adient (ADNT.US), Aptiv (APTV.US), QuantumScape (QS.US), and Lucid Motor (LCID.US). Morgan Stanley: While the overall rating of America's Car-Mart, Inc. has been downgraded, they remain bullish on the stock price of Tesla, Inc. As a long-time staunch supporter of Tesla, Inc., Morgan Stanley maintains a "buy" rating with a target price of $310. Recently, Tesla, Inc. experienced a sharp rebound and closed at $254.27 on Tuesday, up nearly 20% since September in the wake of the Robotaxi rebound. Regarding the upcoming Robotaxi unveiling by Tesla, Inc., Morgan Stanley believes it will be a strong catalyst for the stock price to continue rising. If Tesla, Inc. can demonstrate that they are on track or ahead of schedule in advancing their fully automated driving system based on massive AI training/inference power resources, as well as when the Robotaxi will generate revenue for Tesla, Inc., then this Robotaxi unveiling event could indeed be a breakthrough. NVIDIA Corporation CEO Jensen Huang recently praised Tesla, Inc.'s FSD system, based on AI supercomputing, in a media interview. Tesla, Inc.'s FSD system, based on the Dojo supercomputer chip and NVIDIA.Corporation's high-performance AI GPU (mainly H100 and H200, Musk said that in the future they will purchase Blackwell architecture AI GPU) relies on these powerful hardware systems to support Tesla, Inc.'s massive training/inferencing computational needs for FSD. Huang Renxun and other tech giants have publicly stated that Tesla, Inc.'s FSD is currently the most advanced assisted driving system, and in most cases, it can fully achieve autonomous driving, completely freeing human hands.The well-established market player Tesla, Inc. is set to launch its Siasun Robot&Automation self-driving taxi (robotaxi) based on the latest upgraded FSD fully autonomous driving technology. Tesla, Inc. envisions these self-driving vehicles being able to handle various complex transportation tasks without human driver intervention, including large-scale passenger transport. These vehicles will be integrated into Tesla, Inc.'s broader artificial intelligence and electric vehicle strategy. However, global deployment still requires comprehensive approval from regulatory authorities. Under the leadership of "Queen of Wood" Cathie Wood, the investment firm Ark has great confidence in Tesla, Inc.'s ability to launch a robotaxi network within the next five years. The firm believes that in the future, every Tesla, Inc. vehicle will become a cash flow-generating machine driven by artificial intelligence, and anticipates that Tesla, Inc.'s business model is likely to shift from one-time car sales to recurring sales revenue. The prospect of energy storage is also a key logic behind Morgan Stanley's bullish outlook on Tesla, Inc.'s stock price. The Morgan Stanley analysis team stated that the most attractive aspect for investors in the future of Tesla, Inc. may be its benefit from the global AI trend in CECEP Solar Energy and energy storage business. So far this year, the strongest performers in the US utility sector have been concentrated in electricity and renewable energy stocks. The main logic behind this trend is that these two major subcategories are seen as some of the biggest beneficiaries of the unprecedented global trend of AI deployment, as the exponential demand for AI chips leads to the expansion and construction of high-energy-consuming AI data centers, which in turn rely heavily on large-scale electricity supply infrastructure. This is also the basis for the mainstream market view that "the end of AI is electricity." The unyielding demand for global data centers from companies like CECEP Solar Energy for renewable energy sources is mainly driven by the global decarbonization trend, where CECEP Solar Energy and other renewable energy sources might become the most important sources of electricity generation, if not the only ones. The long-term storage of the massive scale of energy needed by CECEP Solar Energy will undoubtedly play a key role akin to the "shovel seller" for Tesla, Inc.'s energy storage devices.