When it comes to valuing and analyzing Tesla (TSLA) stock, Wall Street analysts — at least the bullish ones — say the company is more than an automaker. And one area of outsized growth for Tesla beyond its car business could be energy.

In its second quarter production and delivery report, Tesla said that it deployed 9.4 GWh (gigawatt hours) of battery energy storage, its highest quarterly amount ever, and more than double the amount of battery storage the company deployed in the first quarter.

Tesla’s energy storage business, part of Tesla Energy, includes installations as small as Powerwall batteries for the home to massive Megapack storage facilities meant for utilities and municipalities to store large amounts of energy for deployment at peak energy usage times.

While a Powerwall typically holds around 12.2 kilowatt-hours of usable energy, or enough to power a small home for a day, one Megapack installation can hold 3.9 megawatt-hours of energy, enough to power 3,600 homes for one hour, Tesla said.

Though Tesla only booked $1.6 billion in revenue from its energy storage business in the first quarter, the company reported a healthy $403 million in gross profit from the business, good for a gross margin of 24.6%.

Tesla’s overall gross profit was $3.7 billion in Q1, with a gross margin of 17.4%, which was down from 19.3% a year ago. The drop in gross margin was due to Tesla’s EV price cuts, which were meant to spur demand and have been eating into profits over the past year.

Here's why energy could be another catalyst for Tesla stock.

Tesla’s auto business, which represents the lion’s share of the company’s revenue and profits, is now actually weighing on Tesla’s overall gross margin, notwithstanding the positive effects of the growing profits and operational efficiency of its energy storage business.

But with Tesla doubling storage deployments in Q2 versus Q1, the effect on the company's bottom line could be substantial — and Wall Street is of course noticing the growth, and profit appeal, of Tesla’s energy storage business.

Morgan Stanley’s Adam Jonas dubbed Tesla’s Q2 energy deployment storage figure a “show stealer,” noting the 9.4 GWh deployed was double the firm’s forecast.

“We believe investors will begin to pay more attention to Tesla Energy which we value at $36 per Tesla share ($130bn) as the business uniquely positioned to benefit from investment in the US electric grid accelerated by the AI boom,” Jonas wrote in a note to clients last week.

Morgan Stanley has a $310 price target on Tesla.

Jonas believes generative AI spending and resulting buildouts will spur a “multigenerational increase in energy demand,” electricity generation, and data center investment, and Tesla’s energy storage business is poised to benefit.

In fact, Jonas said clients have been asking Morgan Stanley more and more about the investment bank’s Tesla Energy long-term business outlook, as well as its predictions for the Optimus robot unit, with an eye toward whether these two initiatives will be catalysts for Tesla beyond Q2.

Much of the "why you should buy the stock" story for Tesla has been centered on the launch of a lower-priced EV — and the reveal of its highly anticipated robotaxi on Aug. 8.

But it may be Tesla’s Q2 earnings report, coming in less than two weeks, that could provide investors with a nice upside surprise if the energy storage business reports another strong quarter of profitable growth.

Pras Subramanian is a reporter for Yahoo Finance covering the auto industry. You can follow him on Twitter and on Instagram.

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