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Tesla Stock Surges as Deutsche Bank, New Street Praise AI Efforts

Tesla climbs as Deutsche Bank reiterates its buy rating and New Street says the company is 'ahead of the curve' on artificial intelligence.

Tesla  (TSLA) - Get Tesla Inc Report climbed Monday after analysts at Deutsche Bank and New Street praised the electric-vehicle maker's artificial intelligence efforts.

Shares of the Palo Alto, Calif., company at last check were 4.4% higher at $710.16.

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Last week, on its Tesla's AI Day, Chief Executive Elon Musk unveiled Tesla Bot, a humanoid robot, a prototype of which the company intends to unveil next year.

Musk said that the 5-foot-8-inch robot is “intended to be friendly” but “probably won’t work” at first. 

"We came away with greater appreciation for Tesla’s efforts in AI," said Deutsche Bank analyst Emmanuel Rosner, who reiterated his buy rating on the company. 

"Big picture, Tesla outlined a very ambitious effort to develop a high performance neural network with very scalable underlying compute and accurate and fast data labeling."

Rosner said in a research note that "this effort creates a positive feedback loop where the system can continuously learn and improve faster than what we think any traditional competitor can achieve."

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Moreover, the analyst continued, this compute platform could ultimately be sold as a service to other machine-learning use cases especially those that require massive scale, which he thinks Tesla itself will explore with its humanoid bot in the coming years.

New Street analyst Pierre Ferragu said Tesla is "ahead of the curve" on solving the real-world AI problem today, according to the Fly.

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Ferragu said that what he heard last week does not affect the way he models Tesla on a 2025 or 2030 horizon as he's "definitely not planning" to model revenues for the Tesla droid yet.

But the analyst said Tesla's artificial intelligence potential "comforts us in our valuation approach."

Ferragu said his conviction is that Tesla will be viewed over the next decade as a winner in electric cars and clean energy, with a long-duration growth outlook. 

This justifies an elevated earnings multiple, in the 50-100 times range, Ferragu said, and progress in real-world AI and self-driving capabilities "will certainly support that perspective and push the multiple in the higher end of this range."

Separately, TheStreet's Jim Cramer had some harsh words for Tesla's Cybertruck, which is expected to enter production in 2022.

"I think that this pickup truck is going to be a disaster. His first disaster. I saw one," said Cramer, who called the vehicle an "eyesore" when compared to Ford's  (F) - Get Ford Motor Company Report electric F-150 Lightning.

Ford is a holding in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells F? Learn more now.