Tesla (NASDAQ:TSLA) shares saw a slight uptick on Wednesday, though they remain significantly below their early-year levels. This comes as investors examine an intriguing report from a prominent Wall Street analyst suggesting that CEO Elon Musk might challenge tech giant Apple (NASDAQ:AAPL).

Apple shares continued their record climb, extending a 7% gain from Tuesday that added approximately $180 billion in market value to the world’s second-largest tech company. Investor enthusiasm is fueled by optimism around Apple’s developing AI capabilities and their potential impact on iPhone sales.

Interestingly, one of the critical voices against some of Apple’s recent announcements, unveiled during its World Wide Developers Conference, was Elon Musk. The Tesla CEO declared he would ban Apple iPhones among company employees and limit their use at production sites after Apple announced a partnership with Microsoft-backed OpenAI and its ChatGPT technology.

“Apple has no clue what’s actually going on once they hand your data over to OpenAI,” Musk said on his verified account on the X social media platform, describing the partnership as “an unacceptable security violation.”

Morgan Stanley analyst Adam Jonas, however, speculates that Musk’s criticism of Apple might have an ulterior motive. Jonas, a longtime Tesla supporter, highlighted Musk’s AI ambitions and the potential profitability from integrating AI into EV production and self-driving software.

In a note published Wednesday, Jonas stated that “the lines between car and phone are truly blurring.” He explained that from discussions with automotive management teams and industry experts, the car is increasingly seen as an extension of the phone.

Jonas noted that Musk had reignited discussions about Tesla potentially making a smartphone, especially after Apple’s WWDC event. He emphasized that as Musk invests further into his own generative AI efforts, such as Grok, the strategic and user-experience overlap between a Tesla phone and Tesla’s existing technologies becomes more apparent.

Jonas has previously argued that Tesla should be valued higher than its current market price, considering its various business segments beyond EV sales. These include driver-assistance systems, battery and energy divisions, and insurance.

Additionally, Jonas pointed out that Tesla’s DoJo supercomputer, powered by AI technologies, could add over $500 million to Tesla’s market value through faster adoption rates in mobility (robotaxis) and network services (software as a service).

Jonas also suggested that Tesla could develop a compelling smartphone handset that leverages its battery and storage capabilities while running powerful AI applications, effectively creating a “heavy car key.” He noted that Tesla owners frequently use their smartphones as primary keys to unlock their cars and run other remote applications while interacting with their vehicles. Jonas maintains an overweight rating and a $310 price target on Tesla stock.

Jonas also mentioned media reports indicating that OpenAI is looking to develop a consumer device specifically designed for AI applications. Musk, meanwhile, has abruptly dropped a California lawsuit against OpenAI and its co-founders, Sam Altman and Greg Brockman. The lawsuit had accused them of prioritizing profit over the organization’s founding mission of benefiting humanity.

As Musk faces a key shareholder vote on a $55.8 billion pay package agreed upon in 2018 but rejected by a Delaware judge last year, he is also raising billions for his AI startup called xAI.

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