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Tesla is still hovering near all-time highs despite poor performance in its core automotive business.
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Nvidia’s high profit margins allow it to invest aggressively in R&D without depleting its cash flow.
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Nvidia is worth much more than Tesla.
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10 stocks we like better than Nvidia ›
Tesla (NASDAQ: TSLA) Shares have been soaring, hitting an all-time high on December 15th. Tesla is now very close to surpassing meta platform and Broadcom (NASDAQ:AVGO) Market value becomes the sixth largest company in the United States, second only to NVIDIA (NASDAQ: NVDA), apple, letter (Nasdaq: Google) (Nasdaq: Google), Microsoftand Amazon.
Tesla shares have soared as investors are excited about the company’s robotics and artificial intelligence (AI) investments, especially self-driving technology through its expanding robotaxi program. Investors are betting that Tesla’s future will rely less on selling electric vehicles (EVs) to homes and more on self-driving cars, Optimus Prime robots and more.
But to fund those efforts, Tesla relies on cash flow from its automotive, energy production and storage divisions. Tesla’s profitability has taken a huge hit as growth slows and costs rise. Its operating margin in the third quarter of 2025 was only 5.8%, compared with 10.8% in the same quarter of 2024.
Tesla’s valuation depends on its future revenue, not its current revenue. Even if Tesla delivers stellar results, it could still underperform over the next three to five years because too much optimism is already factored into the valuation. A better opportunity in 2026 and beyond is with a company with huge growth potential but a more realistic valuation – Nvidia.
Unlike Tesla, Nvidia is already capitalizing on the massive opportunity in artificial intelligence by selling graphics processing units (GPUs) and related software and hardware into data centers — a significant change from Nvidia’s previous primary end markets in gaming, professional visualization and automotive.
Nvidia has been in the spotlight recently due to increasing competition. AMD and Broadcom. Broadcom works with hyperscalers such as Alphabet to develop custom artificial intelligence chips. Broadcom and Alphabet have been working together for years, but the relationship has entered a new phase as Alphabet uses these custom chips to train artificial intelligence models. Alphabet is considering selling its custom chips, called tensor processing units, to other hyperscale providers like Meta Platforms. If Alphabet can compete with Nvidia with full-stack solutions built by customers that don’t rely on GPUs, it could eat into Nvidia’s margins. The threat is already reflected in both companies’ stock prices – Nvidia has gained just a few percentage points over the past three months, while Alphabet has gained 21%.
