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With Tesla (TSLA) and CEO Elon Musk continuing to bet on artificial intelligence and fully autonomous driving coming out of the EV giant's Q3 earnings, Morgan Stanley on Monday said they were "callin' it" and that Tesla has "solved" autonomy. TSLA shares moved above an early entry in Monday's stock market and continued to gain ground Tuesday. The stock market's response to Tesla's third-quarter earnings and conference call last week was mostly muted. However, Morgan Stanley analyst Adam Jonas, a longtime Tesla bull, wrote Monday that, based on Musk's comments on the robotaxi ride-hailing program, Tesla has succeeded in its full self-driving, FSD, efforts. "I'm callin' it. Autonomous cars are solved," Jonas wrote Monday, adding that when he says solved he doesn't mean perfect but "enough to pull the safety driver at scale in major metros." Jonas also said that this is a moment that "changes transportation forever." The Robotaxi Expansion The Morgan Stanley analyst is basing this on Musk's claim that the robotaxi ride-hailing service will expand to eight to 10 metro areas by the end of the year and that safety drivers in Austin, Texas, will be removed in two months. Musk, on the Q2 call, said Tesla "robotaxis" would cover half the U.S. population before the end of the year. He has predicted Tesla would achieve self-driving "this year" or "next year" for nearly a decade. "From our discussions with Tesla, it appears the only thing preventing Tesla from pulling the driver is its own abundance of caution," Jonas said. "Our understanding is that there is no other explicit regulatory approval required to pull drivers in Texas." "It is our long-standing opinion that if you solve autonomy for cars — you solve autonomy for many other form factors of AI-enabled robotics (aviation, marine, weapons, etc.)," Jonas added. While Jonas sounded a bullish tone on Tesla solving autonomous driving, he pointed out Tesla's comment from the conference call that only 12% of all Tesla owners are paying FSD customers. Morgan Stanley estimates that FSD penetration in North America is closer to 20%. Tesla Stock Performance TSLA edged up 1.8% to 460.55 during Tuesday's stock market after advancing 4.3% to 452.42 on Monday, moving above an aggressive early entry of 451.68. Shares declined 3.4% to 433.72 on Friday, but found support at the 21-day moving average. Overall, TSLA fell 1.3% last week, following Q3 earnings. Tesla stock has a traditional handle buy point of 470.75, part of a base going back to late December, according to MarketSurge charts. Investor attention is now on the annual shareholder meeting and Musk's $1 trillion pay package. Tesla Earnings Call Didn't Mention This One Word Again Tesla Board Chair Robyn Denholm on Monday sent a letter to shareholders asking if they "want to retain Elon as Tesla's CEO," hinting at the importance of the annual meeting. "At a time when companies—both big and small—are competing to be the first to bring groundbreaking AI technologies to market, we could not risk losing the best leader in the industry to put Tesla on top," Denholm wrote. Last week, CFRA Garrett Nelson maintained his sell rating on TSLA following earnings. Nelson wrote that the "release and conference call did not do enough to address concerns surrounding the company's near-term earnings growth trajectory, with management passing on a couple of conference call questions related to future products." "TSLA's Energy Storage and Generation business continue to help support sales and margins in the face of weaker Automotive growth, and we think execution risk is high, with the company having promised volume production of the Cybercab, Semi, and Megapack 3 in 2026. In the absence of new developments, we continue to view the stock as susceptible to multiple contraction as investor focus shifts to the company's annual meeting on Nov. 6," Nelson wrote on Oct. 23. Investors can also keep tabs on the Leaderboard, the IBD 50 list of top growth stocks and IBD SwingTrader along with the IBD Sector Leaders list. TSLA has a 79 Composite Rating out of a best-possible 99. The stock also has a 90 Relative Strength Rating and a 47 EPS Rating. Please follow Kit Norton on X @KitNorton for more coverage. YOU MAY ALSO LIKE: Why This IBD Tool Simplifies The Search For Top Stocks
