Tesla shares have climbed 2%, as Morgan Stanley names it a 'top pick' for AI and robotics initiatives.

Tesla shares jumped 2% on Monday after Morgan Stanley reinstalled the electric vehicle manufacturer as its top U.S. auto selection, citing the company's artificial intelligence and robotics activities as potential growth drivers even as the traditional car market struggles.

The note, dated Sunday, was the latest from analyst Adam Jonas, a longstanding Tesla bull who has complimented the company's drive beyond vehicles as sales are pressured by high financing costs in the United States and stiff Chinese competition, especially from BYD.

According to industry data, Tesla sales decreased 45% in Europe in January, while total EV sales increased 37% in the region.

According to Jonas, recent setbacks, such as Tesla's first annual deliveries dip in 2024, indicate the company's transition from an "automotive pure play to a highly diversified play on AI and robotics."

He restated his $430 price objective, one of Wall Street's biggest, implying a 44% increase from the stock's last session.

 The comments echoed Tesla CEO Elon Musk, who has shifted the automaker's focus to robotics and artificial intelligence in the last year, despite experts arguing that widespread adoption of the vehicles could take years due to regulatory constraints and technological restrictions.

Jonas is no new to making wild Tesla forecasts.  In September 2023, he predicted that Tesla's Dojo supercomputer would increase its market worth by approximately $600 billion because of advances in robotics.

Since then, Tesla's market worth has increased by almost $150 billion to nearly $950 billion.

However, its shares have fallen behind the larger US market this year, falling 27% as early enthusiasm over Donald Trump's election victory faded, giving way to fears about slow sales and CEO Elon Musk's White House contacts.

 While Musk has predicted sales growth this year by introducing cheaper models, Jonas believes deliveries may fall in 2025, creating an "attractive entry point."

In October, Tesla unveiled its robotaxi, while Musk boasted work on its humanoid robot "Optimus," which might cost $20,000 to $30,000.

In October, Tesla unveiled its robotaxi, while Musk boasted work on its humanoid robot "Optimus," which might cost $20,000 to $30,000.

Musk stated that Tesla will launch driverless ride-hailing services in California and Texas this year but provided no other information.