A bull-case price target is a best-scenario valuation, not the analyst's actual recommendation, and that gap matters here. Morgan Stanley analyst Andrew Percoco raised his bull-case figure for Tesla (NASDAQ: TSLA) from $820 to $840 while keeping his base-case target at $400 and his equal-weight rating unchanged. The shares traded at roughly $357 at the time of the update.
The short version: a 2.4% nudge in a scenario price. What this actually says is that the Tesla Semi truck has become a more prominent part of Morgan Stanley's long-term software argument for the stock.
The stock's valuation requires believing in software
Tesla makes money today from hardware, primarily electric vehicles and energy storage. A stock trading at 200 times estimated 2026 earnings prices in something different: recurring software income. The clearest example is full self-driving (FSD) software, the paid package that enables autonomous operation. The Cybercab robotaxi fleet and Optimus robots operating on a robot-as-a-service model are further expressions of the same logic.
The Semi fits that argument, and the mileage math explains why. Commercial trucks log far more miles than passenger cars, so the potential software fee per truck is higher than it is per sedan.
Percoco's update raises the possibility of more than 80,000 autonomous Semi trucks on the road by 2040, each generating as much as $18,000 a month in FSD revenue. That scenario, according to Morgan Stanley, could produce more than $17 billion in annual FSD revenue from the Semi by 2040. The Wall Street consensus tracked by Visible Alpha calls for Semi deliveries to rise from 4,000 units in 2027 to 12,000 in 2028 as production ramps. Demand projections rest on the truck's lower cost per mile compared with diesel, a point Percoco cited and one that PepsiCo's pilot program helped demonstrate.
What Musk said on the earnings call
Tesla chief executive Elon Musk, on the company's most recent earnings call, described total Semi volumes as still low and said the truck will remain a small share of output for now. He added that FSD development for the Semi is taking a back seat to work on the Model 3, Model Y, and Cybercab fleet for the next six months. He also said the Semi version of FSD would be working next year, in time for a ramp to high production.
Morgan Stanley still rates Tesla equal-weight, meaning its core view is that the stock is roughly fairly priced at current levels rather than cheap enough to buy outright. Its base-case target is $400 against shares at roughly $357. The $840 bull scenario requires regulatory approval for passenger-car FSD, clearance extended to commercial trucks, and sustained growth in Semi adoption.