SpaceX or Tesla: Which Elon Musk Stock Should Investors Buy?

For years, investors who wanted to bet on Elon Musk's vision had only one real option: Tesla (NASDAQ: TSLA).

That changed when Space Exploration Technologies (NASDAQ: SPCX) finally went public.

Now investors face an unusual choice. They can buy shares of the company trying to reinvent transportation and robotics, or the company building rockets, satellites, and perhaps the backbone of tomorrow's space economy.

At first glance, the path one should follow to get to the better stock pick seems straightforward. Compare the growth rates, compare the headlines, pick a winner. I think that's the wrong approach. The more important question is this: What kind of business do you actually want to own?

Tesla and SpaceX are different companies with vastly different business models.

Image source: Getty Images.

Tesla is trying to turn products into AI platforms

Most people still think of Tesla as an electric vehicle company. That's an increasingly incomplete description.

Tesla does build physical products -- electric vehicles (EVs), batteries, charging networks, and energy storage systems -- but its biggest ambition is to make those products generate recurring value for the company long after they're sold.

Take robotaxis. Instead of selling an EV once, Tesla hopes each of its vehicles can eventually earn it revenue by operating as part of an autonomous ride-sharing network.

Optimus follows the same logic. Rather than selling another gadget, Tesla wants to create a general-purpose robot that businesses -- and perhaps one day households -- could use continuously.

In other words, Tesla is trying to transform itself from a manufacturing company into a software- and AI-driven platform business. If that works, today's EV business could become the foundation for something much larger.

SpaceX is building a massive orbital infrastructure

SpaceX works very differently.

Its rocket launch business puts payloads for businesses and governments into orbit, while its Starlink broadband connectivity business uses thousands of satellites to deliver internet service directly to customers. Together, those businesses create an infrastructure that becomes more valuable as it expands.

For instance, Starlink has grown into one of the world's largest satellite internet networks, with 12 million subscribers. But that's just the tip of the iceberg. Theoretically, this business could reach any individual on earth, so long as it's permitted to operate in their region.

Similarly, SpaceX is investing heavily in its new Starship launch platform and AI infrastructure. The former will significantly reduce the cost of launching payloads into orbit while the latter aims to become a cloud computing powerhouse that rivals the hyperscaler incumbents that dominate that segment now.

In short, SpaceX isn't simply selling rockets. It's building an ecosystem where launch services, satellite communications, and cloud computing increasingly reinforce one another.

Both stocks are expensive -- but for different reasons

Neither Tesla nor SpaceX is cheap. As of this writing, Tesla trades at a price-to-sales (P/S) ratio of 12, while SpaceX trades at about 80.

Tesla's current valuation bakes in the assumption that its robotaxi, Optimus, energy, and AI businesses will eventually become enormous profit centers. On the other hand, SpaceX's even more lofty valuation assumes that Starlink subscriber numbers will continue to expand rapidly, that Starship will reshape the economics of launching payloads into space, and that its expanding AI infrastructure segment will create another layer of profit growth.

So, investors aren't choosing between an expensive stock and a bargain. They're choosing between two expensive companies with different paths to creating long-term value.

Tesla asks investors to believe its biggest businesses are still ahead. SpaceX asks investors to believe that it could create a massive orbital economy.

But one thing is certain: Neither one has a guaranteed path to success.

What does it mean for investors?

Tesla and SpaceX represent two different ways to invest in Musk's vision of the future.

Tesla is trying to use AI to change what machines can do, while SpaceX is trying to build infrastructure that could make entirely new industries possible.

Both opportunities are enormous, but both valuations already reflect significant optimism. That's why I wouldn't choose between them based on which company has the louder headlines or the faster recent growth.

I'd choose based on a simpler question: Which business would you feel more comfortable owning if the stock fell 30% tomorrow? Because when expectations are this high, investors' conviction often matters more than a few headline numbers.

Lawrence Nga has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.