‘It’s Not Even Close,’ Says Morgan Stanley about Nvidia’s Challenge to Tesla

Tesla (TSLA) continues to lead in autonomous driving, even as Nvidia (NVDA) rolls out new technology aimed at helping other automakers build driverless systems. In a recent research note, Morgan Stanley said the gap between Tesla and its peers remains wide.

Top Morgan Stanley analyst Andrew Percoco noted that Nvidia’s autonomy platform gives traditional carmakers a cheaper and faster way to improve their systems. However, he said this approach still puts them in a “faster follower” position rather than true leaders in self-driving.

Why Tesla Still Has the Upper Hand

Percoco pointed to Tesla’s large and active fleet as a key advantage. With millions of vehicles collecting real-world driving data each day, Tesla is able to train and improve its self-driving software at a pace rivals struggle to match.

Because of this data and scale edge, the firm believes Tesla remains “years ahead” of competitors when it comes to autonomy. Morgan Stanley added that Nvidia’s latest advances do not materially change its Tesla outlook, as building a full self-driving stack is measured in years, not months.

Tesla CEO Elon Musk shared a similar view after Nvidia’s updates at CES. He said Nvidia’s progress in self-driving, including its new open-source Alpamayo autonomous driving AI models, could turn into real competition in five or six years, but not anytime soon.

For investors watching the self-driving race, Nvidia may be raising the bar for the broader industry, but Tesla’s lead in autonomy still looks secure.

Is Tesla a Buy, Hold or Sell? 

Turning to Wall Street, analysts have a Hold consensus rating on TSLA stock based on 13 Buys, 10 Holds, and seven Sells assigned in the past three months, as indicated by the graphic below. After a 10% rally in its share price over the past year, the average TSLA price target of $405.94 per share implies 6.85% downside risk.

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