Artificial intelligence (AI) has been a key driver of market growth in recent years, and most every company in the market is touting its current (or future) AI capabilities. That’s because the market has clearly rewarded such rhetoric.

However, the question many investors have is which is the best way to play the AI revolution right now. Is a company like Nvidia (NASDAQ:NVDA), with clear ties to earnings and revenue growth acceleration thanks to AI adoption, the best way to play this surge? Or is a company like Tesla (NASDAQ:TSLA), with AI potential over the long-term, the better way to play this space? Some companies are clearly getting the valuation boost in the here and now, because their revenues and earnings are being impacted today. But given the potential long tail this secular catalyst could have on so many companies, investing early could be the way to go.

That’s the sort of internal discussion I think many growth investor are having right now. Both Jensen Huang (Nvidia’s CEO) and Elon Musk (Tesla’s chief) are visionaries in their own regard. But over the next decade or so, which will come out ahead (at least in terms of stock price returns)?

Let’s dive into this question.

Key Points About This Article:

• Tesla and Nvidia have consistently been among the most-traded stocks in the market, thanks to their meteoric rise and the liquidity of their options chains.
• However, expectations are starting to diverge when it comes to these respective companies’ growth trajectories over the long-term.
• If you’re looking for some stocks with huge potential, make sure to grab a free copy of our brand-new “The Next NVIDIA” report. It features a software stock we’re confident has 10X potential.

Tesla (TSLA)

Tesla is certainly among the companies with long-term stock charts that can only be described as parabolas.

Since going public in 2010, shares of TSLA stock are up a whopping 19,000%. That’s good for a 190x return for investors who stuck with the company for the past 14 years or so. Long-term investing really has its perks, for those who simply buy and hold, and who pick the right long-term winners in a specific category.

Tesla’s growth engine has been its core EV business, but all eyes are now on the company’s ambitions to become an AI and robotaxi company. Tesla’s “We, Robot,” event on October 10 is expected to highlight the company’s focus on bringing its full self driving technology to the robotaxi space, potentially disrupting a massive ride hailing market in the process.

We’ll have to see what’s ultimately announced, and if the company also puts forward lower priced vehicles as part of the release. Additionally, it will be interesting to see how aggressively Musk and his team lean into the concept of introducing AI into its machine learning models, and how that may accelerate the company’s push for regulatory approval for its robotaxi platform, in whatever form that will take.

Personally, I think there are plenty of question marks investors have with respect to this event and what the outcome will be. Accordingly, I expect some serious volatility in the stock following the October 10 unveiling.

While Tesla has continued to surprise markets positively by beating growth expectations on most fronts, this is a whole new frontier that will be difficult to value, giving analysts plenty to work on in a week’s time.

Nvidia (NVDA)

Nvidia has been the clear leader from the perspective of AI stocks as a whole. The high performance chip maker has absolutely dominated the AI chip space, and that’s a fact that’s unlikely to change anytime soon. Yes, there are competitors in this space who are each ratcheting up their investments to try to produce even more powerful chips. But on a pure pound for pound computing power basis, Nvidia is the 800-pound gorilla that isn’t giving competitors much room to move.

The company’s upcoming Blackwell product line is ramping up, and CEO Jensen Huang noted in recent interviews that demand for these AI chips is “insane.” That’s certainly compelling for investors looking to model out what the ultimate revenue and earnings impacts these chips will have on the company’s bottom line.

Certainly, any investor or analyst who has underestimated Nvidia’s growth potential via previous product launches has been ridiculed by the market. I expect this launch to be no different.

Until spending on AI chips slows down, or the market determines that forward demand may grow at a slower pace, this is a stock that seems to have all the catalysts behind it. I think the company’s upcoming quarterly earnings reports will be important to pay attention to, and wouldn’t be surprised to see this stock move higher on any sort of narrative around growth accelerating further.

The Winner

In my view, this really isn’t a close contest at all.

Nvidia’s growth rate is accelerating at the same time Tesla has seen growth slow over many quarters. Yes, robot axis and various AI projects could boost demand for Tesla stock in the near-term. But from a fundamental perspective, I think Nvidia is a far superior company, for many reasons.

Again, slowing growth for either company could lead to period underperformance relative to the other company. But over the next decade or so, I wouldn’t be surprised to see Nvidia outperform Tesla. That’s my take as things stand right now.

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