‘A Fairy Tale Ending,' For Tesla And Elon Musk, Says Gene Munster

Deepwater Asset Management‘s co-founder Gene Munster thinks that Elon Musk should combine Tesla Inc. TSLA with his artificial intelligence company xAI to achieve the $8.5 trillion market capitalization target for the EV giant.

‘A Fairy Tale Ending,’ For Tesla And Elon Musk, Says Gene Munster

In a blog post shared on Friday, the investor outlined his thoughts following the Tesla board’s unveiling of a new $1 trillion compensation package for Musk. “The reality is that a fairy tale Tesla $8.5T market cap is on the table,” Munster said in the post.

He added that the numbers are “mind blowing and achievable” should Musk leverage AI through FSD, Robotaxi and Optimus robots. “I believe that this humanoid robot line could account for more than half of Tesla’s value in the long run,” Munster said.

Tesla’s Merger With xAI

The investor said that a merger with xAI would make sense for the company despite Musk saying there are no such plans currently in place. “Tesla’s market cap would likely jump on the announcement of a deal, unlocking pent-up retail demand for xAI through Tesla stock,” Munster said.

He added that xAI’s research could help the EV giant develop its products and that the company’s AI Model Grok was gaining traction. “With xAI’s next funding round rumored at $175–$200B, the company remains small enough for Tesla to consider acquiring within the next year,” Munster said.

Tesla Revises FSD Definition Amid Robotaxi Expansion

Tesla has recently revised the definition of the FSD system, which the company now states is “an advanced driving system, regardless of the marketing name used, that is capable of performing transportation tasks that provide autonomous or similar functionality under specified driving conditions,” according to the SEC filing of Musk’s pay package.

This was preceded by Tesla expanding its Robotaxi operations in Austin, which now also operates on highways. However, the company has moved the onboard safety operator from the passenger seat to the driver’s seat, in what could be a response to Texas updating its autonomous driving regulations.

Tesla’s Optimus Exploits, Master Plan IV

Meanwhile, Salesforce Inc. CRM CEO Marc Benioff recently hailed Musk and the Tesla Optimus robot in a social media post after Musk’s prediction, which said that the robot could represent over 80% of the company’s value in the future.

Tesla also unveiled its Master Plan IV, which is a roadmap for its future endeavors. The plan focused heavily on artificial intelligence and the Optimus humanoid robot while having little mention of the company’s EV plans.

Tesla scores well on Momentum and Growth metrics, while offering satisfactory Quality, but poor Value. For more such insights, sign up for Benzinga Edge Stock Rankings today!

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