Tesla (TSLA) stock is advancing 2.5% after Morgan Stanley issued an upbeat note on TSLA stock. The investment bank, which continues to identify TSLA as a top pick, expects the company's total addressable market (TAM) to rise going forward.

Why Morgan Stanley Remains Very Bullish on TSLA

The fact that Tesla's auto deliveries are weakening suggests that the company is changing from a focus on EVs to an emphasis on AI and robotics, well-known Morgan Stanley analyst Adam Jonas contended. Tesla's TAM is likely to increase as AI moves to physical products, and the latter increase is to a large extent not reflected in analysts' estimates for the firm, the analyst believes.

Also importantly, the market for AI in products outside of autos will probably be much bigger and grow faster than the market for autonomous vehicles, according to Jonas. The analyst is also very bullish on Tesla's opportunity in the field of robotics, writing that, "We believe the humanoids opportunity could see a greater quantum of capital behind it with Tesla at the epicenter of the theme."

The analyst kept an $800 price target on the shares.

The Recent Price Action of TSLA Stock

In the last month, the shares have sunk 22%, while they are down 16.5% in the last three months.

While we acknowledge the potential of TSLA, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than TSLA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.