Which Tech Giant Will Be the Better Investment in 2025?

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Which Tech Giant Will Be the Better Investment in 2025?

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Investing in

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can take time and education to get it right and see significant returns. But even the most reliable stocks can go through surprising ups and downs based on a variety of economic factors.

If you’re looking at two of the “Magnificent 7” stocks, Tesla and Apple, this year and wondering which is a better investment, that question may not be as straightforward as one over the other.

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To understand the value of a stock beyond just its current price on the stock market, investors use a ration known as the P/E ratio, essentially the price-to-earnings ratio, according to

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.

To get this figure, you divide the price of the stock (P) by the company’s

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(E). So if a stock is trading at around $20 per share, and its earnings are $1, it has a P/E of 20 ($20 divided by $1).

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So currently, Tesla’s stock is currently trading at a P/E ratio of over 110, which is extremely high, according to Scott Ritchie, an investing expert at

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Tesla is a unique company because on the one hand, it’s a car company, but on another it’s also something of a tech company, depending on how you look at it.

If you look at it as a car company, it’s an excellent value. Ritchie pointed out that its

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is $1.3 trillion, which is at least 20 times the market cap of General Motor and 30 times Ford’s market cap.

“In 2024, Tesla produced 1.77 million cars, that makes it a

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in my opinion, and it should be valued as one. Not to mention that the 1.77 million cars is a drop in production from the 2023 1.84 million cars,” Ritchie said.

If you look at it as a tech company, due to its heavy investment in

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, “It is still too soon to bet on it at this valuation especially since most of Tesla’s developments are focused on autonomous driving, which still faces a lot of challenges including regulatory ones that could delay it for at least a couple of years,” Ritchie added.

Compared to other tech companies with an over $1 trillion market cap like

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, Meta,

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, Apple and

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, Tesla still has a higher P/E ratio, but this may be more due to its leadership as a car company.

On the other hand, Tesla may be doing well with its cars, but according to David Materazzi, CEO of

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, an automated trading platform, “[Tesla hasn’t] yet proved that they can dominate the EV market. They don’t have as much money in the bank and it’s still quite a young company.”

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Apple is often considered a sure thing in stock, because of its

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and wide variety of products. However, Ritchie pointed out that Apple has seen very slow growth lately, both in

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of new products.

“Last year they announced that they cancelled their decade-long electric-car project after spending $10 billion on it over the course of 10 years,” the investing expert said. “Their latest innovative product, the Apple Vision Pro, kicked off with a great debut but seem to have lost the attention soon after.”

The canceled car project is likely a good thing, Ritchie said, because it could have been a “distraction” that took Apple away from what it’s good at. Overall, Ritchie added, “Apple could be a better investment than Tesla currently. It is more stable in terms of

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. It has a wider range of products with much less production challenges, that combined with the

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makes a great profit-making formula.”

Materazzi is in agreement. While Apple and Tesla are totally different companies they do share similarities. However, he said, “Apple is an extremely successful company with a long history, they have a lot of cash in the bank and their stock is often considered safe, relatively speaking among tech stocks. Apple is already a leader. Tesla is not.”

The truth is, you probably can’t go wrong investing in either, or both, Materazzi said. Both stocks are part of the Magnificent 7, the big tech stocks.

“Both stocks are frequently purchased by short-term speculators, even if Tesla is the original meme stock and may have a slight advantage in this,” he said.

Tesla’s products may have better immediate returns, but “their products are more vulnerable in the marketplace,” Materazzi said. Apple is considered more stable but that also brings lower returns.

Ultimately, consult with a financial advisor if you’re trying to decide between the two.

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