Tesla vs. Nvidia: Which Is the Better AI Stock to Buy Now?

The artificial intelligence boom is here. And it's undeniable. Alphabet's Waymo is providing 400,000 autonomous rides per week and tech giants are collectively committing to spending hundreds of billions of dollars on capital expenditures in 2026, driven primarily by AI computing infrastructure.

As investors assess the implications of the technological revolution we find ourselves in, it's a good time to consider what companies are sitting at the center of this new era. I'd argue that AI chipmaker Nvidia (NASDAQ: NVDA) and electric carmaker Tesla (NASDAQ: TSLA) are two of the most pivotal players in today's AI race. Nvidia is powering this expansionary moment with its chips, and Tesla is extending AI into the physical world with autonomous vehicles and robotics.

But which of these two AI growth stocks is the better buy? To find out, let's look closely at both.

Tesla's unreleased Cybercab, purpose-built for autonomy. Image source: Tesla.

Tesla: Big, bold plans

For investors looking at Tesla, you'll have to first get comfortable with the fact that the company's core business is going through a rough patch before you are ready to invest in the company. Tesla's 2025 deliveries of about 1.6 million fell 9% year over year as elevated interest rates and a lack of a clear catalyst for its vehicle business weighed on the business. In addition, the company's full-year revenue fell 3% year over year, and its earnings per share declined 47%.

But once you look beneath these headline figures, there are some things to be excited about.

First, there's Tesla's energy business. It's seeing explosive growth. Total energy storage deployed in 2025 grew 49% year over year to 46.7 gigawatt hours. This spurred 27% year-over-year revenue growth in its energy generation and storage segment, bringing it to about $12.8 billion for the year.

Second, the company has recently made meaningful progress in the rollout of its autonomous ride-sharing service, Robotaxi. The ride-sharing service, which is still largely just a pilot program, is active in both Austin and the San Francisco Bay area. In its fourth-quarter update, Tesla said it began testing driverless Robotaxis in Austin in December and began removing the safety monitor from some customer rides in January. While this may seem small, the company believes it will be able to scale the service quickly, since Tesla has equipped every vehicle it ships with the hardware management believes will enable autonomous driving when the software is ready. In the long run, Tesla contends, vehicle owners will be able to add their vehicles to a shared fleet and have it generate income for them.

Tesla also plans to begin producing a humanoid robot, called Optimus, later this year. While it will take a long time for this nascent business to ramp up, Tesla CEO Elon Musk said during the company's most recent earnings call that it aims to eventually reach a production volume of 1 million Optimus robots per year.

Nvidia: Explosive financial results

Contrary to Tesla's financials, investors should be easily impressed by Nvidia's explosive financial performance lately. The tech company's fiscal third-quarter revenue rose 62% year over year to $57 billion. Net income for the period rose 65% year over year.

"Blackwell sales are off the charts, and cloud GPUs are sold out," said Nvidia CEO Jensen Huang in the company's fiscal third-quarter earnings release. "Compute demand keeps accelerating and compounding across training and inference -- each growing exponentially."

The company is so profitable that it's able to both invest aggressively in its fast-growing business while also repurchasing an enormous amount of shares. In the trailing nine-month period ended Oct. 26, 2025, the company repurchased about $37 billion worth of its shares.

And with multiple tech giants committing to spend well over $100 billion on capital expenditures this year, there's a strong case that we're still in the early innings of the AI buildout, so Nvidia should have a huge tailwind for the foreseeable future.

Ultimately, Tesla's plans to bring AI into the physical world are exciting, but Nvidia looks like a much better investment thanks to its robust financials. And the gap between the two widens further when you look at valuation. Nvidia's price-to-earnings multiple of about 47 as of this writing seems well-deserved. Tesla's, on the other hand, is difficult to justify at 390.

Of course, both companies face substantial risks. Nvidia's biggest threat is probably the ambitious in-house chip programs of tech giants like Amazon, Alphabet, and Microsoft. These could eat into Nvidia's growth opportunities and even lead to pricing competition. For Tesla, the risk is that the growth opportunities it is investing in don't turn into high-margin revenue streams.

Despite its risks, Nvidia's overall risk-reward profile looks substantially better than Tesla's. With that said, its shares aren't cheap, so investors should consider keeping any position in the stock small.

Daniel Sparks and/or his clients have positions in Tesla. The Motley Fool has positions in and recommends Alphabet, Amazon, Microsoft, Nvidia, and Tesla. The Motley Fool has a disclosure policy.