Morgan Stanley analyst and Tesla Inc bull Adam Jonas forecasts Tesla's revenue from its energy segment to rise this year as its core EV business witnesses a revenue fall.

What Happened: Jonas values Tesla Energy at $36 per share of his $310 price target for the company. The bull is optimistic for the segment and expects it to add over $1 in earnings per share by 2030 excluding incentives.

The analyst said in a note on Tuesday that the acceleration in the field of generative AI will create an increase in demand for energy which Tesla is well positioned to benefit from.

"We believe that Tesla's capability in distributed energy generation (solar) and storage (powerwall/ megapack) may hold some important cards in the evolution of the US grid as energy usage of compute/ data grows," Jonas wrote while adding that he expects Tesla's energy segment to generate $7 billion in revenue for the full year 2024, up by nearly 20% from 2023. Auto revenues, however, will go down, the analyst predicted.

Jonas also expects Tesla Energy margins to surpass Tesla Auto margins this year.

Why It Matters: In 2023, Tesla's energy segment accrued revenues of $6,035 million, up 54% up from 2022.

In January, the company expressed expectations for the growth rate of deployment and revenue in the energy storage business in 2024 to surpass that of the automotive sector. Deployments will be volatile and impacted by logistics and global distribution of products, said the company, while adding that it still expects continued growth on a twelve-month basis.

For the first quarter, Tesla disclosed that it deployed 4,053 MWh of energy storage products, representing its highest quarterly deployment to date and a year-on-year increase of 4.2%.

In April, Musk said that the demand for its stationary energy storage products is "super high" and hinted that the company might make more batteries for energy storage than cars in the long term.

"I think Tesla might end up doing more total Joules in stationary than mobile long-term," Musk said.

Earlier this month, during Tesla's annual shareholder meeting, Tesla CEO Elon Musk said that the company is on track to complete a "massive number of energy deployments."

"We seem to be tracking to sort of a 200- to 300-percent year-over-year growth in energy storage deployment and stationary pack. So it's giant. And the limiting factor really is being able to build more Megapacks and build more Powerwalls," Musk said.