Consider the Possibility of Investing in These Two AI Stocks Instead of Tesla at Present Time
In the current AI boom, two companies, ASML Holding and Alphabet, are standing out as more promising investments compared to Tesla.
ASML Holding, a leading manufacturer of lithography machines for semiconductors, holds a unique technological monopoly in the semiconductor manufacturing equipment sector. The company's extreme ultraviolet (EUV) lithography machines are essential for the mass production of cutting-edge AI chips. Despite near-term uncertainties, such as the 2026 growth not being guaranteed due to tariff and customer demand fluctuations, ASML expects robust medium-term growth. Sales are projected to grow 15% over 2024, and the company anticipates revenue between 44 billion to 60 billion euros by 2030, with strong gross margins around 56-60%.
On the other hand, Alphabet, the parent company of Google, YouTube, and Google Cloud, is benefiting from continuous innovation and integration of AI into consumer and enterprise products. The company reported a 14% Year-on-Year (YoY) revenue increase and a 22% Earnings Per Share (EPS) growth. Despite a cheaper forward multiple than the S&P 500, Alphabet's stock remains undervalued, considering its strong fundamentals. Google's search revenue remains resilient despite AI competition fears, showing strong momentum in AI product monetization.
Tesla, by contrast, is facing headwinds with declining EV sales and poorly performing new models. While CEO Elon Musk is investing in AI through the xAI division and chip production partnerships, Tesla's AI business lacks the same growth visibility. Its main AI exposure is tied indirectly to automotive AI and chip demand, which is weaker compared to the semiconductor and software leadership of ASML and Alphabet.
In summary, ASML's technological dominance in semiconductor manufacturing equipment and Alphabet's leadership in AI-driven software and services give them stronger growth outlooks in the AI sector than Tesla, which is currently challenged by its core automotive market struggles despite some AI investments.
Google Services revenue increased 10% YoY to $77 billion in the last quarter, and Google Cloud revenue increased 28% YoY last quarter to $12.3 billion. ASML sells its machines for hundreds of millions of dollars with over 50% gross margins, and the company's stock is considered cheap after its latest drawdown and deserves consideration in one's portfolio.
With billions of dollars being invested in advanced computer chips, ASML has a large demand tailwind from AI. Alphabet, as a significant driver of demand for computer chips and ASML's machines, is also well-positioned to drive AI adoption and create demand for semiconductor technologies. ASML's P/E ratio is 26, indicating potential growth compared to Tesla's P/E ratio of over 180.
Google Cloud, with its large growth potential as AI proliferates in the software industry, is another attractive investment in the AI sector. ASML's stock, considered an appetizing buy compared to Tesla's, could help operating margins leap to 40% compared to 36% over the last 12 months. If you own Tesla, it might be time to consider better replacements in your portfolio to play the AI boom.
- In the current AI boom, ASML Holding, with its technological dominance in semiconductor manufacturing equipment, presents a stronger growth outlook in the AI sector compared to Tesla.
- Alphabet, the parent company of Google, YouTube, and Google Cloud, is well-positioned due to its continuous innovation and integration of AI into consumer and enterprise products, making it an attractive investment in the AI sector.
- ASML's P/E ratio of 26 indicates potential growth, which is significantly lower than Tesla's P/E ratio of over 180, making ASML's stock an appetizing buy.
- Google Cloud, with its large growth potential as AI proliferates in the software industry, could help create demand for semiconductor technologies through its significant demand for computer chips and ASML's machines, making it another attractive investment in the AI sector.
