Tesla’s share price has dipped, but is it likely to outperform these AI favorites?
It’s now official: Tesla (TSLA 0.32%) has lost its crown as the world’s largest electric vehicle (EV) maker. That distinction now belongs to Chinese automotive company BYD.
Even though Tesla’s share price is down on the news, it’s still trading above $425/share, very close to its all-time high.
Today’s Change
(-0.32%) $-1.40
Current Price
$431.56
Key Data Points
Market Cap
$1.4T
Day’s Range
$431.53 – $438.35
52wk Range
$214.25 – $498.83
Volume
2.7M
Avg Vol
81M
Gross Margin
17.01%
Should you buy shares of the former top EV maker on the dip? Or would you be better off putting your money into three artificial intelligence (AI) stocks instead?
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 (GOOG +2.50%) (GOOGL +2.37%) for about $315; one share of memory chip maker Micron Technology (MU 1.13%), which also trades at about $315/share; and one share of power and cooling infrastructure player Vertiv Holdings (VRT 1.95%) for about $175. That’s a total cost of about $805.
Advertisement
Which of these would be a better buy for your $800 and change?
Image source: Tesla.
How they did in 2025
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. Tesla’s shares, on the other hand, languished. The carmaker’s stock only rose 8.5% for the year.
Today’s Change
(2.37%) $7.44
Current Price
$321.78
Key Data Points
Market Cap
$3.8T
Day’s Range
$314.20 – $326.15
52wk Range
$140.53 – $328.83
Volume
1.6M
Avg Vol
36M
Gross Margin
59.18%
Dividend Yield
0.26%
Such explosive growth in the AI stocks’ share prices wasn’t always accompanied by explosive revenue growth. Even though all three of the AI stocks grew their revenue in 2025, those gains were modest, with Alphabet’s revenue only up 10.2%, Vertiv’s up 21%, and Micron’s increasing by 35.1%.
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. All three beat Tesla on both fronts as Elon Musk’s flagship company’s revenue slipped 2.1% and profits tumbled 27.8%.
Micron Technology
Today’s Change
(-1.13%) $-3.88
Current Price
$339.55
Key Data Points
Market Cap
$387B
Day’s Range
$337.18 – $346.30
52wk Range
$61.54 – $346.30
Volume
33M
Avg Vol
26M
Gross Margin
45.56%
Dividend Yield
0.13%
So even though the AI stocks have already seen significant growth over the past year, that growth is underpinned by growth in the top and bottom lines. Meanwhile, Tesla’s share price growth, although underwhelming, outpaced its business fundamentals, which didn’t grow at all. From a performance standpoint, the basket of AI stocks looks like a better buy.
A question of value
When a company’s share price goes up faster than its underlying fundamentals, its valuation increases as well. When a stock’s valuation gets too high, it’s sometimes unsustainable. So one of the big questions for the AI stocks is whether their big 2025 share price gains have put them into overvalued territory, where they might be ripe for a share price correction.
Surprisingly, though, the trailing price-to-earnings (P/E) ratios of the AI stocks haven’t risen significantly, despite their recent share price appreciation. In the case of Vertiv, its trailing P/E is actually down year over year. All three are well within their five-year ranges.
Today’s Change
(-1.95%) $-3.41
Current Price
$171.54
Key Data Points
Market Cap
$67B
Day’s Range
$168.53 – $174.21
52wk Range
$53.60 – $202.45
Volume
5.2M
Avg Vol
7.2M
Gross Margin
33.73%
Dividend Yield
0.10%
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. While Alphabet’s forward P/E of 28.3 is only slightly lower than its trailing P/E of 31, Vertiv’s 32.8 forward P/E is just half of its trailing 65.3 P/E. And Micron’s forward P/E of 9.6 is less than one-third of its trailing P/E of 29.5!
The valuations of all three AI stocks are massively lower than Tesla’s trailing P/E ratio of 304.3, and even its forward P/E of 205.6. From a valuation standpoint, it’s a very clear win for the AI stocks as well.
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.