The artificial intelligence boom is here. And it is undeniable. AlphabetWaymo offers 400,000 self-driving rides per week, and the tech giants collectively pledge to spend hundreds of billions of dollars on capital spending in 2026, driven primarily by AI computing infrastructure.
As investors weigh the implications of the technological revolution we’re in, it’s a good time to think about which companies are at the center of this new era. I would argue that the AI chip maker Nvidia(NASDAQ: NVDA) and electric car manufacturer adze(NASDAQ:TSLA) are two of the most important players in the AI race today. Nvidia is fueling this moment of expansion with its chips, and Tesla is extending AI into the physical world with autonomous vehicles and robotics.
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But which of these two AI growth stocks is the better buy? To find out, let’s take a closer look at both.
Tesla’s unreleased Cybercab, created specifically for autonomy. Image source: Tesla.
For investors looking at Tesla, you’ll first need to familiarize yourself with the fact that the company’s core business is going through a rough patch before you’re ready to invest in the company. Tesla’s 2025 deliveries of about 1.6 million fell 9% year over year as high interest rates and the lack of a clear catalyst for its vehicle business hurt the business. Additionally, the company’s full-year revenue fell 3% year-over-year, and earnings per share fell 47%.
But once you look below those headline numbers, there are a few things to be excited about.
First is Tesla’s energy business. It is experiencing explosive growth. Total energy storage installed in 2025 increased by 49% year-on-year to 46.7 gigawatt hours. That spurred a 27 percent year-over-year revenue increase in its energy generation and storage segment to about $12.8 billion for the year.
Second, the company has recently made significant progress in launching its autonomous ride-sharing service, Robotaxi. The ride-sharing service, which is still largely just a pilot program, is active in both Austin and the San Francisco Bay Area. In its fourth-quarter update, Tesla said it began testing the driverless Robotaxis in Austin in December and began removing the safety monitor from some customer rides in January. While that may seem small, the company believes it will be able to scale the service quickly because Tesla has equipped every vehicle it ships with the hardware that management believes will enable self-driving when the software is ready. In the long term, Tesla claims, vehicle owners will be able to add their vehicles to a shared fleet and generate revenue for them.
Tesla also plans to start producing a humanoid robot, called Optimus, later this year. While it will take a long time for this nascent business to grow, Tesla CEO Elon Musk said during the company’s most recent earnings call that he aims to eventually reach a production volume of 1 million Optimus robots per year.
Unlike Tesla’s financials, investors should be mildly impressed by Nvidia’s explosive financial performance of late. The tech company’s fiscal third-quarter revenue rose 62% year-over-year to $57 billion. Net income for the period was up 65% year-on-year.
“Blackwell sales are off the charts and cloud GPUs have sold out,” Nvidia CEO Jensen Huang said in the company’s fiscal third-quarter earnings release. “The computational demand continues to accelerate and worsen during training and inference—each growing exponentially.”
The company is so profitable that it is able to both invest aggressively in its fast-growing businesses and repurchase an enormous amount of shares. In the final nine-month period ended October 26, 2025, the company repurchased approximately $37 billion worth of shares.
And with several tech giants committing to spending over $100 billion in capital expenditures this year, there’s a strong case that we’re still in the early days of AI development, so Nvidia should have a huge tailwind for the foreseeable future.
Ultimately, Tesla’s plans to bring AI into the physical world are exciting, but Nvidia looks like a much better investment thanks to its solid funding. And the gap between the two widens even more when you look at valuation. Nvidia’s price-to-earnings multiple of about 47 at the time of writing seems well-deserved. The Tesla, on the other hand, is hard to justify at 390.
Of course, both companies face substantial risks. Nvidia’s biggest threat is probably the ambitious in-house chip programs of tech giants like Amazon, Alphabetand Microsoft. These could hurt Nvidia’s growth opportunities and even lead to pricing competition. For Tesla, the risk is that the growth opportunities it invests in won’t turn into high-margin revenue streams.
Despite its risks, Nvidia’s overall risk-reward profile looks substantially better than Tesla’s. That said, its shares aren’t cheap, so investors should consider keeping any position small.
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Daniel Sparks and/or his clients have positions in Tesla. The Motley Fool has positions and recommends Alphabet, Amazon, Microsoft, Nvidia and Tesla. The Motley Fool has a disclosure policy.
Tesla vs. Nvidia: What’s the best AI stock to buy now? was originally published by The Motley Fool
