Comparing AI Strategies: Tesla vs. Meta Platforms for Investors in 2025
Tesla (NASDAQ: TSLA) specializes in electric vehicles (EVs), while Meta Platforms (NASDAQ: META) operates social networks such as Facebook, Instagram, and WhatsApp. These companies are distinct in their operations.
However, they share a significant common goal: both are heavily investing in artificial intelligence (AI).
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Tesla’s and Meta’s stock prices both jumped over 60% in 2024, reaching near historical peaks. Now that 2025 has arrived, investors are eager to determine which company presents a better buying opportunity. The direction seems to be clear.
Image source: Getty Images.
Why Investors Might Favor Tesla
Tesla stands out in the AI field, boasting an optimistic outlook from Wall Street analysts. Much of this optimism is tied to its full self-driving (FSD) software, which current Tesla owners can already test in beta mode.
Elon Musk, CEO of Tesla, emphasizes that autonomous driving is the automotive industry’s future. In October, the company introduced its Cybercab robotaxi, which operates without pedals or a steering wheel, relying entirely on FSD to navigate. Tesla envisions a ride-hailing service where the Cybercab autonomously transports passengers, allowing continuous revenue generation with potentially high profit margins.
Consumers can either purchase the Cybercab for personal use or acquire a fleet to start their own ride-hailing service through Tesla’s platform. This product innovation opens several new revenue avenues, leading analyst Dan Ives of Wedbush Securities to estimate a potential market opportunity worth $1 trillion.
Nonetheless, Tesla is facing some immediate challenges. In 2024, it delivered 1.79 million passenger EVs, a decrease of 1.1% from 2023. With EV sales comprising nearly 80% of its revenue, sustaining growth in this area is critical.
Another challenge is that the Cybercab won’t enter mass production until 2026, necessitating impressive passenger EV sales to hold investor confidence for another year.
Additionally, Tesla’s FSD software lacks regulatory approval for unsupervised use in the U.S. Speculation exists that under the incoming Trump administration, regulations may become more favorable, fast-tracking approval processes. Musk is hopeful for approvals in states like California and Texas this year.
Even so, Tesla shares are currently priced at an extremely high valuation based on products that have yet to be rolled out, posing risks for investors buying in at this time.
On a brighter note, Cathie Wood’s Ark Investment Management anticipates that Tesla stock could surge by 530%, reaching $2,600 by 2029 if the Cybercab and FSD prove successful. Thus, for high-risk investors, the potential return could be considerable.
Reasons to Consider Meta Platforms
Meta generates over 98% of its revenue from selling advertising space on its platforms, including Facebook and Instagram. The company’s success hinges on user engagement—longer browsing translates to more ads viewed and increased revenue.
In recent years, Meta enhanced its recommendation engine with AI to learn user preferences, leading to tailored content that keeps users on the platform longer. In the third quarter of 2024, CEOMark Zuckerberg reported that AI-driven recommendations increased the time users spent on Facebook by 8% and Instagram by 6% year-to-date.
However, this is just the beginning of Meta’s expansive AI initiatives. In 2023, the company launched a chatbot called Meta AI, amassing 500 million monthly active users. This tool integrates into Meta’s apps, allowing users to ask questions and request generated images.
Currently, Meta AI is free, but there is potential for businesses to monetize the chatbot by embedding product links within responses, opening a valuable new revenue stream for the company.
Meta AI operates on the Llama family of large language models (LLMs), which is open-source, enabling community contributions to enhance the model. Llama ranks as the world’s most popular open-source model suite, with over 600 million downloads.
Meta will announce its 2024 financial results on January 29, likely revealing an investment of around $40 billion in data center infrastructure to support its AI efforts. The upcoming launch of Llama 4 is anticipated to introduce advanced AI features to Meta’s platforms and create fresh revenue opportunities.
For 2025, Wall Street predicts that Meta could achieve a record $186 billion in revenue and earn $25.38 per share. These figures suggest that the stock currently represents an attractive investment.
Final Thoughts on Investment Choices
Ultimately, the choice between these two companies hinges on valuation. Tesla stock currently trades at an impressive price-to-earnings (P/E) ratio of 108, which is significantly higher than the Nasdaq-100’s average of 32.1.
In contrast, Meta stock is much more appealing, with a P/E ratio of only 29.1.
TSLA PE Ratio data by YCharts
The future of Tesla’s business growth remains uncertain as it embarks on 2025. Elon Musk suggests a potential 30% growth in EV deliveries, yet the overall situation presents a “show me” scenario given 2024’s results. I advise caution for those considering Tesla stock at its current valuation, especially based on projections for 2026 involving the Cybercab and FSD.
Conversely, Meta seems better positioned to leverage AI for financial gain this year, as enhancements to its recommendation engine could instantly boost advertising revenue. Given its favorable valuation, Meta appears to be the safer investment for 2025.
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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook, and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Meta Platforms and Tesla. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
