Key Takeaways
- Tesla has lost its position as the world’s largest electric vehicle (EV) maker to Chinese company BYD.
- Despite this, Tesla’s share price remains high, trading above $425/share.
- Investors may be better off putting their money into artificial intelligence (AI) stocks, such as Alphabet, Micron Technology, and Vertiv Holdings.
- These AI stocks have seen significant growth in 2025, with share price increases ranging from 54.5% to 275%.
- The AI stocks have also seen growth in revenue and profits, with modest revenue gains and more significant profit increases.
- From a valuation standpoint, the AI stocks appear to be a better buy, with lower price-to-earnings ratios compared to Tesla.
Introduction to the Situation
The recent news that Tesla has lost its position as the world’s largest electric vehicle (EV) maker to Chinese company BYD has had an impact on the company’s share price. However, despite this, Tesla’s share price remains high, trading above $425/share. This has led to the question of whether investors would be better off putting their money into Tesla or into artificial intelligence (AI) stocks, such as Alphabet, Micron Technology, and Vertiv Holdings. As the article states, "The proposition Tesla’s shares currently trade above $400/share, so a pair of Tesla shares would cost you more than $800. However, for roughly the same cost as two shares of Tesla, you could buy one share of AI heavyweight Alphabet…one share of memory chip maker Micron Technology…and one share of power and cooling infrastructure player Vertiv Holdings."
Comparing Performance in 2025
In 2025, the AI stocks saw significant growth, with share price increases ranging from 54.5% to 275%. In contrast, Tesla’s share price only rose 8.5% for the year. As the article notes, "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 explosive growth in the AI stocks’ share prices was not always accompanied by explosive revenue growth, but the companies did see significant increases in profits.
Evaluating Revenue and Profit Growth
The AI stocks saw modest revenue gains in 2025, with Alphabet’s revenue only up 10.2%, Vertiv’s up 21%, and Micron’s increasing by 35.1%. However, the companies saw more significant increases in profits, with Alphabet’s net income rising 24.1%, Vertiv’s growing by 108.6%, and Micron notching 154.9% growth. In contrast, Tesla’s revenue slipped 2.1% and profits tumbled 27.8%. As the article states, "All three companies did a better job growing their profits. Alphabet’s net income rose 24.1% year over year, which is still well below its share price gains, while Vertiv grew its net income by 108.6%, and Micron notched 154.9% growth."
Considering Valuation
When a company’s share price goes up faster than its underlying fundamentals, its valuation increases as well. This can lead to an unsustainable valuation, making the stock ripe for a share price correction. However, in the case of the AI stocks, their trailing price-to-earnings (P/E) ratios have not risen significantly, despite their recent share price appreciation. In fact, Vertiv’s trailing P/E is actually down year over year. As the article notes, "Surprisingly, though, the trailing price-to-earnings (P/E) ratios of the AI stocks haven’t risen significantly, despite their recent share price appreciation." The forward P/E ratios of the AI stocks are also lower than their trailing P/E ratios, indicating that the companies’ earnings are expected to grow into their new stock prices.
Conclusion
Based on the analysis, it appears that a basket of AI stocks consisting of a share each of Alphabet, Vertiv, and Micron would be a better use of $850 than buying two shares of Tesla. The AI stocks have seen significant growth in 2025, with modest revenue gains and more significant profit increases. From a valuation standpoint, the AI stocks appear to be a better buy, with lower price-to-earnings ratios compared to Tesla. As the article concludes, "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."
https://www.fool.com/investing/2026/01/07/forget-tesla-buy-artificial-intelligence-ai-stock/