Daily Brief - 🌩️ The hottest AI stock? Tesla

TLDR: It’s good portfolio hygiene to rotate through different themes and positions as market conditions change. For example, as investor mania moves from EVs to AI, it’s time to look at the basket of stocks that are likely to benefit from this new exuberance. Unless you own Tesla: then you just sit back and relax because this business goes from being an EV stock, to an energy company, and now … an AI play.

How does this happen?

Enter … Dojo. The custom supercomputer platform was built from the ground up for AI machine learning and, more specifically, for video training using the video data coming from Tesla’s fleet of vehicles.

The supercomputer, designed to handle massive amounts of data in training driving systems, may put Tesla at “an asymmetric advantage” according to Morgan Stanley analysts, and could make software and services the biggest value driver for Tesla from here onward.

In fact, they think it could add as much as $500 billion to the company’s market value through faster adoption of robotaxis and network services.

The Morgan Stanley opinion alone added already about $78 billion of that today as TSLA jumped 10% on the close of trading.

The more exciting prospect here is that investors have found another AI stock to invest in. Move over, NVDA. (Never mind that, exasperatingly, the AI play is once again one of the already richly valued tech giants …)

A few caveats are in order. Morgan Stanley is a frequent advisory firm to TSLA. That gives it, ahem, a reason to be bullish on the company’s prospects.

Its analysts have been famously (albeit correctly, but for the wrong reasons) upbeat on the company’s prospects - in 2015, it held the view that Tesla would launch an app-based on-demand mobility service to compete with the likes of Uber.

What's happening in the markets?

This section is powered by Open AI connected to TOGGLE AI

Tech stocks faced a setback as Oracle Corp reported a slowdown in cloud sales, causing their stock to plummet by 10% during premarket trading. Oracle's shares have performed strongly, surging by 55% in the same period when the S&P 500 saw a 17% rise year-to-date.

Analysts at Morgan Stanley expressed concerns about the actual revenue generated from generative AI demand, given these results.

Nonetheless, Oracle's technology chief highlighted that AI development companies have already committed to purchasing over $4 billion worth of capacity in Oracle's Gen2 Cloud, which is double the amount from the end of the previous quarter.

The tech sector will remain in focus as Apple gears up for the launch of its latest products this evening

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Earnings Update: Cracker Barrel reports tomorrow

The Southern country themed restaurant operator's new store openings will likely have aided the company’s performance but inflation pressures (such as commodities and wages) continue to pose a threat for costs.

Discover how other companies could react post earnings with the help of TOGGLE's WhatIF Earnings tool.

Asset Spotlight: 1 more week of Tesla seasonality

Last week, TOGGLE highlighted that Tesla stock typically experiences positive seasonality over the next 2 weeks based on analyzing 13 similar occasions in the past. Read full insight!

General Interest: Book time: a republican that hates corporations

The other day we read something interesting on Alphaville: a US right-wing author had written a book against corporations.

Sohrab Ahmari is the kind of author that one follows with interest, because he can swing his views.

Raised as a Shia Muslim, he later embraced atheism, and ultimately converted to Roman Catholicism in 2016. He’s pro-life (or anti-choice, depending on your political views) and he’s squarely anti-woke … just ask David French. Once a critic of Trump/Le Pen/Putin, in recent years he even spoke in favour of Orban.

In short, the chap has the key hallmark of an intellectual: he can change his views.

His recent stance falls close to the median of the US right wing commentator, so it’s all the more surprising to see him articulate a vision that one could have defined, in a different century, as marxist.

Tyranny, Inc rails against corporate capture of US lawmaking. At 288 pages it is basically a weekend read*. Discover more here on the Economist.

*As always with non-fiction essays, we also invite you to consider buying a summarized version. Authors write hundreds of pages about what would neatly fit a 10 page long-form article. Call it “shelf vanity”.