Better Buy in 2025: Tesla Stock or Meta Platforms Stock?

Tesla - Tesla CEO Elon Musk believes autonomy is the future of the automotive industry, with the company unveiling its Cybercab robotaxi in October, which lacks pedals and a steering wheel as FSD handles the entire driving process [1] - The company plans to build a ride-hailing network where the Cybercab can autonomously haul passengers and earn revenue around the clock, with high profit margins due to the absence of human drivers [1] - Consumers can purchase the Cybercab for personal use or operate a ride-hailing service using Tesla's network, unlocking several new revenue streams, with analyst Dan Ives from Wedbush Securities believing it could be a $1 trillion opportunity [7] - Tesla's full self-driving (FSD) software, already in beta mode for passenger EVs, is a major source of optimism, though it lacks regulatory approval for unsupervised use in the U.S. [13][16] - Tesla delivered 1.79 million passenger EVs in 2024, a 1.1% drop compared to 2023, with EV sales accounting for almost 80% of total revenue, posing a short-term challenge [18] - The Cybercab is not scheduled for mass production until 2026, requiring Tesla's passenger EV sales to impress investors for at least another year [18] - Ark Investment Management predicts Tesla stock could soar 530% to $2,600 by 2029 if the Cybercab and FSD are successful, offering substantial payoff for high-risk-tolerant investors [14] Meta Platforms - Over 98% of Meta's revenue comes from selling advertising slots on its social networks, with user engagement directly driving ad revenue [2] - Meta launched an AI chatbot called Meta AI in 2023, which has already amassed 500 million monthly active users and is embedded in all of the company's apps, allowing users to ask questions or generate images [3] - Meta AI is powered by the Llama family of large language models (LLMs), which is open source and has over 600 million downloads, making it the most popular open-source model family globally [4] - Meta spent $40 billion in 2024 building data center infrastructure to further its AI ambitions, with plans to launch Llama 4, potentially the most advanced LLM in the world, paving the way for new AI features and revenue opportunities [10] - AI-powered recommendations drove an 8% increase in time spent on Facebook and a 6% increase on Instagram in Q3 2024, enhancing user engagement and ad revenue potential [8] - Meta AI is free to use, but businesses may eventually pay to embed product links in its responses, unlocking a new revenue stream [9] - Wall Street consensus estimates suggest Meta could deliver a record $186 billion in revenue and $25.38 in earnings per share in 2025, making its stock attractive [5] Industry and Valuation - Tesla and Meta both bet heavily on AI, with Tesla focusing on autonomous driving and Meta on AI-driven social media and advertising [17] - Tesla stock trades at a high P/E ratio of 108, three times more expensive than the Nasdaq-100's 32.1 P/E ratio, while Meta stock trades at a more enticing P/E ratio of 29.1 [11] - Both Tesla and Meta stocks soared by over 60% in 2024, ending the year near record highs, but Meta is seen as a safer buy for 2025 due to its attractive valuation and immediate AI-driven revenue potential [12][15]