Key Takeaways
- Tesla has lost its title as the world’s largest electric vehicle (EV) maker to Chinese rival BYD, causing its stock to dip.
- Three artificial intelligence (AI) stocks, Alphabet, Vertiv, and Micron Technology, have outperformed Tesla in terms of earnings and revenue growth.
- The AI stocks are more reasonably valued than Tesla, with lower price-to-earnings (P/E) ratios.
- A basket of AI stocks consisting of Alphabet, Vertiv, and Micron may be a better investment opportunity than buying Tesla shares.
Introduction to the Shift in the EV Market
Tesla, once the leading electric vehicle (EV) maker, has officially lost its title to Chinese automotive company BYD. This news has caused Tesla’s stock to dip, although it still trades above $425 per share, close to its all-time high. As stated in the article, "It’s now official: Tesla (NASDAQ: TSLA) has lost its crown as the world’s largest electric vehicle (EV) maker. That distinction now belongs to Chinese automotive company BYD." This shift in the EV market has led investors to wonder if it’s still a good time to buy Tesla shares or if they should consider alternative investment opportunities, such as artificial intelligence (AI) stocks.
Comparing Tesla to AI Stocks
The article proposes an interesting comparison between Tesla and three AI stocks: Alphabet, Vertiv, and Micron Technology. For roughly the same cost as two shares of Tesla, an investor could buy one share of each of these AI stocks. As the article notes, "For roughly the same cost as two shares of Tesla, you could buy one share of AI heavyweight Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) for about $315; one share of memory chip maker Micron Technology (NASDAQ: MU), which also trades at about $315/share; and one share of power and cooling infrastructure player Vertiv Holdings (NYSE: VRT) for about $175." This raises the question of which investment would be more beneficial for an investor’s $800.
Performance of AI Stocks in 2025
The AI stocks had an impressive year in 2025, with significant growth in their share prices. Vertiv’s stock was up 54.5%, Alphabet’s shares rose 66.5%, and Micron’s shares returned a jaw-dropping 275% for the year. In contrast, Tesla’s shares only rose 8.5% for the year. The article highlights that "2025 was an amazing year for AI stocks. Even though the S&P 500 was up an impressive 16.4% in 2025, Vertiv’s stock was up 54.5%, Alphabet’s shares rose 66.5%, and Micron’s shares returned a jaw-dropping 275% for the year." This significant growth in the AI stocks’ share prices was accompanied by modest revenue growth, but more substantial profit growth.
Valuation of AI Stocks
Despite their significant share price growth, the AI stocks’ valuations have not risen dramatically. In fact, their trailing P/E ratios have not increased significantly, and their forward P/E ratios are lower than their trailing P/E ratios, indicating that the companies’ earnings are expected to grow into their new stock prices. As the article states, "Better still, for all three stocks, their forward P/E ratios, which look at estimated earnings for the coming year, are lower than their trailing P/E ratios, indicating that the companies’ earnings are expected to grow into their new stock prices." This is in contrast to Tesla’s high trailing P/E ratio of 304.3 and forward P/E ratio of 205.6.
Conclusion and Recommendation
Based on their performance and valuation, a basket of AI stocks consisting of Alphabet, Vertiv, and Micron appears to be a better investment opportunity than buying Tesla shares. The article concludes that "All things considered, a basket of AI stocks consisting of a share each of Alphabet, Vertiv, and Micron looks like a better use of $850 than buying two shares of Tesla." Investors who are considering buying Tesla shares on the dip may want to reconsider and explore the potential of AI stocks instead. As the article notes, "Don’t miss this second chance at a potentially lucrative opportunity… On rare occasions, our expert team of analysts issues a ‘Double Down’ stock recommendation for companies that they think are about to pop."
https://www.nasdaq.com/articles/should-you-forget-tesla-and-buy-3-artificial-intelligence-ai-stocks-instead