How Much Is Tesla Software Worth? A Lot.

A second broker has taken a shot at valuing Tesla’s software business. The conclusion, good news for the company and for other carmakers, is that Tesla software is worth a lot.

UBS analyst Patrick Hummel took a look at some of the value hidden away in Tesla (ticker: TSLA). The idea that some might still be undiscovered within the world’s most valuable automaker, whose stock has trounced the competition, might seem oxymoronic. But bulls believe Tesla is more than just a car company, given that it sells solar panels, insurance, and importantly, software.

Hummell isn’t a full Tesla bull. He rates shares at Hold and has a target of $730 for the share price. He believes other automakers will have some success ramping up sales volumes for EVs, but that “Tesla remains the undisputed tech leader, most notably in software.”

At his price target. well above the stock’s current level of about $686, Tesla would be worth roughly $700 billion. He values the car business at roughly $200 billion, leaving about $500 billion for everything else.

“The lion’s share of this value can be generated by software, mainly autonomous driving,” wrote Hummell in a Wednesday report. “Out of $20 [billion operating profit] we expect Tesla to generate in 2025, $9 [billion] should already be software-driven.”

That almost half of profit would come from software by 2025 is surprising. Most of that would be from Tesla’s autonomous-driving package, called full self-driving mode, which sells for $10,000 today. To make more money, Tesla could improve the rate at which consumers choose that option, as well as potentially offering it via a monthly subscription.

Hummell isn’t the only one that values Tesla software highly. Morgan Stanley analyst Adam Jonas has taken a sum-of-the-parts approach to valuing Tesla stock, looking at the different businesses separately. He values Tesla’s software and services business at roughly $250 billion.

That’s lower than Hummell’s call, but Jonas still rates Tesla stock at Buy, with a target of $880 for the share price. Jonas believes the Tesla car business is more valuable than Hummell does, valuing it at roughly $350 billion.

All the value and profit coming from software isn’t just a benefit to Tesla. Other auto makers plan similar products. Ford Motor (F) already plans to offer products related to its fleet of commercial vehicles around the globe. General Motors (GM) still has On Star. And Tesla peer NIO (NIO) is considering the idea of selling its autonomous-driving software as a subscription.

The theoretical valuation discussions about hidden assets, however, weren’t helping Tesla stock Wednesday. Shares were down about 0.6% in midday trading. in line with the S&P 500. The Dow Jones Industrial Average was up about 0.1%.

The stock is down about 15% over the past couple of weeks, but is still more than 350% higher over the past year.

As tech leaders race to bring Windows systems back online after Friday’s software update by cybersecurity company CrowdStrike crashed around 8.5 million machines worldwide, experts share with CIO Journal their takeaways for preparing for the next major information technology outage.

Be familiar with how vendors develop, test and release their software

IT leaders should hold vendors deeply integrated within IT systems, such as CrowdStrike , to a “very high standard” of development, release quality and assurance, said Neil MacDonald , a Gartner vice president.

“Any security vendor has a responsibility to do extensive regression testing on all versions of Windows before an update is rolled out,” he said.

That involves asking existing vendors to explain how they write software, what testing they do and whether customers may choose how quickly to roll out an update.

“Incidents like this remind all of us in the CIO community of the importance of ensuring availability, reliability and security by prioritizing guardrails such as deployment and testing procedures and practices,” said Amy Farrow, chief information officer of IT automation and security company Infoblox.

Re-evaluate how your firm accepts software updates from ‘trusted’ vendors

While automatically accepting software updates has become the norm—and a recommended security practice—the CrowdStrike outage is a reminder to take a pause, some CIOs said.

“We still should be doing the full testing of packages and upgrades and new features,” said Paul Davis, a field chief information security officer at software development platform maker JFrog . undefined undefined Though it’s not feasible to test every update, especially for as many as hundreds of software vendors, Davis said he makes it a priority to test software patches according to their potential severity and size.

Automation, and maybe even artificial intelligence-based IT tools, can help.

“Humans are not very good at catching errors in thousands of lines of code,” said Jack Hidary, chief executive of AI and quantum company SandboxAQ. “We need AI trained to look for the interdependence of new software updates with the existing stack of software.”

Develop a disaster recovery plan

An incident rendering Windows computers unusable is similar to a natural disaster with systems knocked offline, said Gartner’s MacDonald. That’s why businesses should consider natural disaster recovery plans for maintaining the resiliency of their operations.

One way to do that is to set up a “clean room,” or an environment isolated from other systems, to use to bring critical systems back online, according to Chirag Mehta, a cybersecurity analyst at Constellation Research.

Businesses should also hold tabletop exercises to simulate risk scenarios, including IT outages and potential cyber threats, Mehta said.

Companies that back up data regularly were likely less impacted by the CrowdStrike outage, according to Victor Zyamzin, chief business officer of security company Qrator Labs. “Another suggestion for companies, and we’ve been saying that again and again for decades, is that you should have some backup procedure applied, running and regularly tested,” he said.

Review vendor and insurance contracts

For any vendor with a significant impact on company operations , MacDonald said companies can review their contracts and look for clauses indicating the vendors must provide reliable and stable software.

“That’s where you may have an advantage to say, if an update causes an outage, is there a clause in the contract that would cover that?” he said.

If it doesn’t, tech leaders can aim to negotiate a discount serving as a form of compensation at renewal time, MacDonald added.

The outage also highlights the importance of insurance in providing companies with bottom-line protection against cyber risks, said Peter Halprin, a partner with law firm Haynes Boone focused on cyber insurance.

This coverage can include protection against business income losses, such as those associated with an outage, whether caused by the insured company or a service provider, Halprin said.

Weigh the advantages and disadvantages of the various platforms

The CrowdStrike update affected only devices running Microsoft Windows-based systems , prompting fresh questions over whether enterprises should rely on Windows computers.

CrowdStrike runs on Windows devices through access to the kernel, the part of an operating system containing a computer’s core functions. That’s not the same for Apple ’s Mac operating system and Linux, which don’t allow the same level of access, said Mehta.

Some businesses have converted to Chromebooks , simple laptops developed by Alphabet -owned Google that run on the Chrome operating system . “Not all of them require deeper access to things,” Mehta said. “What are you doing on your laptop that actually requires Windows?”