Palantir Tesla Drones Morgan Stanley Analyst

Elon Musk and Alex Karp (Bill Clark/Getty Images)

Maybe Tesla should be Palantir

A Morgan Stanley analyst has some suggestions for new businesses for the automaker struggling with a pronounced sales drop.

Matt Phillips

6/5/25 11:13AM

If imitation is the sincerest form of flattery, Palantir CEO Alex Karp is probably blushing.

Meta has recently begun to dabble in the world of defense technology, a clear indication that Palantir’s surging share price is getting the attention of Silicon Valley’s elite.

And on Thursday, Morgan Stanley analyst Adam Jonas — a longtime Tesla watcher — seemed to be suggesting that Tesla CEO Elon Musk try to mimic Palantir, writing that the EV company could expand its product portfolio to include some sort of autonomous drone division. (Palantir has been involved in developing AI software for drones.)

The total addressable market of electronic vertical take-off and landing drones could hit $9 trillion by 2050, “far bigger than cars,” Jonas said.

Of the opportunity, he writes:

“TSLA’s skills transferability. Manufacturing, material science, navigation/autonomy, electric motor development, battery storage, supporting infrastructure and robotics… Tesla has a host of relevant skills to be a factor in the Low Altitude Economy from both a commercial and (potentially) non-commercial perspective.
Starlink the ‘connective tissue’ in the Low Altitude Economy. Anyone following the situation in Ukraine/Russia over the past 3 years understands the deterministic role of low latency, reliable, resilient/redundant satellite communications in the battlefield to conduct basic to sophisticated maneuvers and operations.
The DOGE Angle. While Elon Musk is no longer working directly with team DOGE, we suggest investors keep a watchful eye on incremental developments on actions and ‘suggestions’ that could prove influential to the reformation of US transportation.”

While Jones concedes that he has no information indicating that Tesla is pursuing an aviation division, his note is a reflection of the attention earned by Palantir, which sells a range of AI, intelligence, and data management software to both government and corporate clients. It’s the performance, stupid.

After last year’s 340% run-up, making it the top stock in the S&P 500, Palantir is up another 74% in 2025, neck and neck with NRG Energy for this year’s biggest gainer among the blue chips — thanks, in part, to a large and loyal base of retail shareholders.

But whether or not a Tesla turn to defense technology would connect with the market is an open question.

As we’ve written before, part of the reason that Palantir shares have exploded is the perception that the company’s connections with the Trump administration — influential right-wing political donor Peter Thiel is a cofounder and the largest individual shareholder in the company, with a stake worth roughly $9 billion — will translate to additional government contracts. The federal government is Palantir’s biggest single customer.

And while Musk has been arguably closer to President Trump himself in the early going of Trump 2.0, that relationship seems to be going off the rails quickly.

Max Knoblauch20m

Rivian climbs as it rolls out a “universal hands-free” update and scores an upgrade from Baird

Shares of EV maker Rivian are on pace for their 10th best day of 2025 on Thursday, following an upgrade from Baird to “buy” from “hold” and the rollout of its new hands-free driving update.

Baird raised its price target on Rivian nearly 79% to $25, writing that “2026 is the year of R2.”

Meanwhile, Rivian says its new hands-free feature will allow drivers to take their hands off the wheel across 3.5 million miles of US and Canadian roads.

Despite referring to it as “universal hands-free” driving, the EV maker says the feature will not stop or slow for traffic lights or stop signs, follow navigation systems, or make turns, and will function only on roads with visible lane lines.

Rivian revealed the update at its AI Day last week, when it also hinted at a robotaxi plan.

Rivian rolls out new 'Universal Hands-Free' driving feature | TechCrunch

Meanwhile, Rivian says its new hands-free feature will allow drivers to take their hands off the wheel across 3.5 million miles of US and Canadian roads.

Rivian revealed the update at its AI Day last week, when it also hinted at a robotaxi plan.

Matt Phillips1h

The stock market loves your rising electricity bill

Utilities with a footprint in the massive PJM Interconnection, the country’s largest power grid, were up Thursday after prices set in a key auction hit a record high of $333.44 per megawatt-day.

Such power providers, including Talen Energy, Constellation Energy, and Vistra, saw tidy gains shortly before midday.

“This auction leaves no doubt that data centers’ demand for electricity continues to far outstrip new supply, and the solution will require concerted action involving PJM, its stakeholders, state and federal partners, and the data center industry itself,” Stu Bresler, set to become PJM’s chief operating officer next month, told Reuters.

As I’ve previously mused, political pushback from high power prices, partially created by the AI boom, could become a constraint on development of such sites. Democrats in the US Senate are now calling for hearings on the issue.

It’s fertile political soil. This morning’s US CPI report for November showed electricity prices up nearly 7% year over year, the highest since the tail end of the postpandemic inflation in April 2023.

Costs on Key US Grid Hit New Record, Testing Affordability

Luke Kawa2h

Micron’s earnings, soft inflation, and OpenAI valuation chatter revive speculative AI trade

The three biggest news events since markets closed yesterday are all helping spur a big bounce-back for the more speculative companies tied to AI:

Micron’s eye-popping Q2 guidance reaffirmed beyond a shadow of a doubt how hot AI demand continues to run in the near term.
While the data is undoubtedly messy, core CPI inflation decelerated by much more than anticipated in November. Lower rates are a clear positive for more marginal companies levered to the AI theme, whose stocks trade with a higher embedded risk of default and whose bonds have also been suggesting more credit risk as of late.
OpenAI reportedly getting its hands on more money (and commanding a higher valuation in the process) provides some semblance of valuation support for these firms and also a better fundamental foundation as well: more cash in CEO Sam Altman’s pockets means more cash he has to make good on commitments to OpenAI’s many suppliers.

Put together, the key news items since Wednesday’s close are producing massive gains for the likes of Bloom Energy, Cipher Mining, POET Technologies, CoreWeave, IREN, and Nebius.

Matt Phillips2h

GE Vernova upped to “buy” at Jefferies

GE Vernova is up early, enjoying the benefits of both a rebound in the AI data center trade and an upgrade to “buy” from analysts at Jefferies. In a note published on Thursday, they wrote:

“We upgrade to Buy. More positive on the outlook for Power (gas pricing & services visibility) and electrification yet shares are down since the December 9th Analyst Day. $815 PT up from $736. Gas turbine pricing continues to positively surprise and services provides visibility deeper into the 2030s, eventually offsetting gas equipment weakness.”

The target is slightly above the FactSet consensus price target of $753 on the stock, and implies a 23% premium to GE Vernova’s closing price on Wednesday. The stock is up almost 100% in 2025.

Luke Kawa

US stocks get hot as inflation cools by more than expected

Annual core CPI inflation falls to lowest level since March 2021.

Federal Reserve Chair Jerome Powell Testifies Before The House Financial Services Committee