General Motors Is An AI Powerhouse With Untapped Potential: Morgan Stanley

Morgan Stanley analyst Adam Jonas reiterated an Overweight rating on the shares of General Motors Co GM with a price target of $38.

With about 300 driverless AV's concurrently running, completing more than 1000 driverless trip per day and above 1.5 million miles surpassed, Cruise is arguably one of the most advanced robotaxi services currently on offer, the analyst noted.

The analyst thinks Cruise is GM's bet for the future, but the market seems more focused on near term profitability and sees Cruise as a perennial consumer of cash.

The analyst believes there's an apparent dichotomy between the enormous technological capability of the Cruise unit and the stock market's valuation of the overall GM enterprise.

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While most of the attention goes to Cruise robotaxi, the analyst thinks strategic and commercial value of the company's in-house L2+ ADAS capabilities in Super Cruise and Ultra Cruise may be worth even more to the company.

Despite the debate, the analyst sees potentially multiple areas where the GM commercial and technological platform can be seen as an AI enabler, adopter or winner.

In the analyst's opinion, a fleet of 10,000 vehicles would require a presence in potentially more than a dozen cities across the country to reach the company's target of $1 billion Cruise revenue by 2025.

However, GM stock price appears to heavily discount the potential of the business based on current operating performance and pushed out estimates for AV roll-out broadly, concluded the analyst.

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Price Action: GM shares are trading lower by 0.44% at $37.49 on the last check Wednesday.