While electric carmaker Tesla (TSLA 3.14%) and social media specialist Meta Platforms (META 2.52%) are two very different companies that generate revenue from very different sources, both of their futures seem closely tied to AI (artificial intelligence).
Interestingly, just a few years ago, the bull case for either stock didn't depend as much on AI as it does today. But both companies are transforming their businesses, with AI at the center. Tesla is expanding its Robotaxi ride-hailing service that depends on advances in AI computing, and Meta Platforms is making a huge bet on AI infrastructure to support both its core business and a more aspirational goal: building a personal superintelligence.
But which growth stock is a better bet for investors looking to take advantage of the opportunities in AI? Here is a look at each company and how each one is positioned to benefit from the rise of this powerful computing power.
Image source: Getty Images.
Tesla: Robotaxi could scale quickly
Today, Tesla primarily makes money from selling electric vehicles. But over time, management believes the company can increasingly generate revenue from services -- namely, Robotaxi and the self-driving software that powers it.
"[W]e expect our hardware-related profits to be accompanied by an acceleration of AI, software and fleet-based profits [over time]," Tesla explained in its most recent quarterly earnings release.
NASDAQ: TSLA
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More specifically, every vehicle Tesla sells today is equipped with the hardware Tesla believes will eventually enable full self-driving. Of course, Tesla will need to make software advancements first, as well as further progress in AI. But when the underlying technology is ready, Tesla plans to send an over-the-air software update that will enable its vehicles to drive themselves. And to accelerate time-to-market for its scaled Robotaxi service, Tesla plans to let owners put their vehicles into its autonomous ride-sharing fleet.
The issue for Tesla is that its business is extremely dependent on the success of Robotaxi, as its financials are struggling in the meantime. Net income in its most recent quarter fell 37% year over year. And while we don't have the financial results for Q4 yet, Tesla reported a sharp year-over-year decline in deliveries for the period.
Meta Platforms: AI is already paying off
For Meta, the bull case is more straightforward -- and, more importantly, I believe there's lower risk to it. Unlike Tesla, Meta's business is growing very fast. Revenue in its third quarter rose 26% year over year. While net income did fall during the period, this is because of a one-time non-cash charge in the period related to your provision for income taxes. Absent this charge, Meta's net income increased about 19% year over year.
Also worth noting is that Meta cited AI as one of the key drivers of the quarter's growth, noting that improvements in its AI ranking systems are serving as a key catalyst for its ads business. This means that Meta doesn't have to wait for its investments in AI to start paying off. They already are.
One challenge for Meta, however, will be the company's soaring capital expenditures. Following huge growth in capital expenditures in Q3, the company raised its full-year outlook for capital expenditures to a range of $70 billion to $72 billion. In addition, management said that its growth in capital expenditures in 2026, measured in dollars, will be significantly larger than it was in 2025. This means that Meta expects its 2026 capital expenditures to comfortably exceed $100 billion, with the bulk of this growth slated for AI-capable computing power.
But one point worth noting is that Meta has a backup plan for its AI compute if the opportunities it expects from AI do not materialize. In the "worst case" scenario, Meta CEO Mark Zuckerberg explained in the tech company's third-quarter earnings call, it can just build new infrastructure slowly for a period while it grows into what it already built.
The best-case scenario?
If "superintelligence arrives sooner, we will be ideally positioned for a generational paradigm shift in many large opportunities," Zuckerberg said.
NASDAQ: META
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Which AI stock is a better buy?
Even without considering valuation, Meta Platforms already looks like a better bet in the era of AI. Not only is its business already benefiting from AI, with accelerating revenue growth, but the company has contingency plans for what it can do with its AI compute power if a generational paradigm shift doesn't occur as Zuckerberg hopes it will.
Of course, investors should look at valuation, too. And when you do, it seals the deal: Meta looks like the better stock. The stock currently has a price-to-earnings ratio of about 30, while Tesla's ratio sits at over 300. Tesla's valuation requires near-perfect execution on its ambitious Robotaxi plans, and Meta's valuation prices in nothing extraordinary -- just more of the same: strong, profitable growth.
With all this said, we can't know for sure that Meta will, without a doubt, outperform Tesla over the long haul. Tesla's robotaxi opportunity is significant. But its valuation doesn't leave much room for error. In other words, Tesla stock is much risker than Meta.
