Which Tech Giant Will Be the Better Investment in 2025?
Investing in stocks can take time and education to get it right and see significant returns. But even the most reliable stocks can go through surprising ups and downs based on a variety of economic factors.
If you’re looking at two of the “Magnificent 7” stocks, Tesla and Apple, this year and wondering which is a better investment, that question may not be as straightforward as one over the other.
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Stock experts explain what makes each company valuable and offer considerations for when you invest.
To understand the value of a stock beyond just its current price on the stock market, investors use a ration known as the P/E ratio, essentially the price-to-earnings ratio, according to Charles Schwab.
To get this figure, you divide the price of the stock (P) by the company’s annual per-share earnings (E). So if a stock is trading at around $20 per share, and its earnings are $1, it has a P/E of 20 ($20 divided by $1).
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So currently, Tesla’s stock is currently trading at a P/E ratio of over 110, which is extremely high, according to Scott Ritchie, an investing expert at Stoculator.
Tesla is a unique company because on the one hand, it’s a car company, but on another it’s also something of a tech company, depending on how you look at it.
If you look at it as a car company, it’s an excellent value. Ritchie pointed out that its current market cap is $1.3 trillion, which is at least 20 times the market cap of General Motor and 30 times Ford’s market cap.
“In 2024, Tesla produced 1.77 million cars, that makes it a mature car manufacturer in my opinion, and it should be valued as one. Not to mention that the 1.77 million cars is a drop in production from the 2023 1.84 million cars,” Ritchie said.
If you look at it as a tech company, due to its heavy investment in AI and robotics, “It is still too soon to bet on it at this valuation especially since most of Tesla’s developments are focused on autonomous driving, which still faces a lot of challenges including regulatory ones that could delay it for at least a couple of years,” Ritchie added.
Compared to other tech companies with an over $1 trillion market cap like Microsoft, Meta, Google, Apple and Amazon, Tesla still has a higher P/E ratio, but this may be more due to its leadership as a car company.
On the other hand, Tesla may be doing well with its cars, but according to David Materazzi, CEO of Galileo FX, an automated trading platform, “[Tesla hasn’t] yet proved that they can dominate the EV market. They don’t have as much money in the bank and it’s still quite a young company.”
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