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Tesla (TSLA) has spent years setting the pace in robotaxis and autonomous driving, selling investors a bold, tightly controlled vision of the future. By owning the car, the software, and the data loop, Tesla positioned itself as the gatekeeper of self-driving progress, confident that scale and secrecy would preserve its edge as autonomy inches closer to reality.
Nvidia (NVDA) enters this story from a very different angle. Best known for building the world’s most powerful GPUs and serving as the backbone of modern artificial intelligence (AI), Nvidia, instead of building vehicles or running robotaxi fleets, is equipping everyone else with the intellectual machinery to compete.
With its newly unveiled open-source AI models, Nvidia is pushing “human-like” reasoning into autonomous systems and handing that capability to the wider auto industry. In doing so, it transforms Tesla rivals like Lucid (LCID), Mercedes-Benz (MBGYY), and BYD Company Limited (BYDDF) into credible challengers, while anchoring them to Nvidia’s data centers and in-vehicle hardware stack.
As autonomy evolves from a single-company moonshot into an industry-wide arms race, which stock captures more value when robotaxis finally hit scale? Let’s find out.
The Case For Tesla Stock
Founded in 2003, Texas-based Tesla is far more than an electric vehicle (EV) maker. Under Elon Musk’s relentless vision, it fuses EVs, battery storage, solar energy, and early-stage robotics into a single, future-facing ecosystem. Operating across more than 30 countries in North America, Europe, and Asia, Tesla continues to shape the global conversation around clean mobility and next-generation infrastructure. Its market capitalization currently stands at around $1.46 trillion.
Tesla’s stock journey in 2025 has been anything but linear. The year opened under pressure as slowing EV demand, tariff concerns, and Musk’s ever-present political spotlight weighed on sentiment. For months, TSLA churned sideways, trapped in a narrow range. Then, almost on cue, the narrative shifted. Musk reignited momentum after locking in a compensation package potentially worth up to $1 trillion and making his first personal share purchase in five years, deploying nearly $1 billion. The move erased year-to-date (YTD) losses in days, with momentum steadily rebuilding since.
Over the past six months, TSLA rose 46.3%, more than doubling from its April low of $214.25 to a blistering fresh peak of $498.83 on Dec. 22. However, that rally has cooled, with TSLA sliding 13.5% from its peak and stumbling after Nvidia’s autonomy push, leaving shares down 3% in the last five days, signaling a pause. It’s been a distinctly jolting start to 2026.
The technical picture reflects that breather. Trading volume has been fading, suggesting buying enthusiasm is thinning at these levels. The 14-day RSI, which flirted with overbought territory in December, has slipped to 43.48, pointing to weakening momentum rather than outright oversold conditions.
Meanwhile, the MACD oscillator has turned less steady – the MACD line has fallen below the signal line, with a negative histogram confirming bearish momentum building. For now, TSLA looks like a stock digesting gains, caught between long-term optimism and short-term technical fatigue.
From a valuation lens, Tesla remains priced for near-perfection. Trading at roughly 242.4 times forward adjusted earnings and over 15.18 times forward sales, TSLA sits far above sector averages and its own historical medians, leaving little room for operational missteps.
Tesla’s Q3 Bottom Line Slips Below Forecasts
Tesla’s third-quarter 2025 earnings report, released on Oct. 22, was mixed. Revenue declined 12% year-over-year (YOY) to $28.1 billion, but still ahead of expectations, while non-GAAP EPS slid 31% annually to $0.50 - an unmistakable reminder that the EV boom has matured into a far more competitive grind. Margins felt the squeeze too. Gross margin eased to 18% from 19.8% a year ago as tariffs, weaker factory absorption, and an unfriendly sales mix weighed on results, only partly offset by softer raw-material costs.
Still, Tesla’s balance sheet told a sturdier story. Cash, equivalents, and investments swelled 24% to $41.6 billion, fueled by nearly $4 billion in free cash flow and $6.2 billion in operating cash flow. Operating income landed at $1.6 billion, though margins compressed to 5.8% as expenses surged 50% YOY to $3.43 billion, driven largely by heavier AI and R&D investments.
Operationally, the picture was uneven. Q3 production dipped 5% to 447,450 vehicles, missing estimates, but deliveries surprised to the upside at 497,099 units, up 7% YOY, led by a 9% rise in Model 3 and Model Y shipments. Automotive revenue climbed 6% to $21.2 billion, showing demand resilience despite pricing pressure.
By year-end, however, cracks widened. Fourth-quarter EV deliveries fell to 418,227 vehicles, missing forecasts and pulling full-year deliveries down 8.5% to 1.63 million – the steepest annual decline in Tesla’s history. Rising competition, especially from lower-cost rivals in Europe and China, is clearly biting, while the long-promised robotaxi upside remains distant as peers like Alphabet’s (GOOG) (GOOGL), Waymo, and China's Baidu (BIDU) push ahead with fully driverless scale.
Tesla is set to report its Q4 earnings after the bell on Wednesday, Jan. 28, with eyes already drifting toward 2026 catalysts – from broader FSD rollouts in China and Europe to robotaxis, the Cybercab, Semi production, and Optimus’ commercial debut.
Analysts tracking Tesla predict the EV company’s EPS sliding 45.1% YOY to $1.12 in fiscal 2025. Yet, in fiscal 2026, the tone is anticipated to improve, with earnings expected to bounce back sharply – up nearly 59% – pushing EPS to around $1.78.
Analysts remain sharply divided on Tesla. The stock has a “Hold” rating overall. Of the 40 analysts covering the stock, 14 recommend a “Strong Buy,” one has a “Moderate Buy,” 16 suggest a “Hold,” and the remaining nine have a “Strong Sell” rating. While the EV stock is currently trading above its mean price target of $400.18, Wedbush’s street-high of $600 implies potential upside of 37.68%.
The Case For NVIDIA Stock
Valued at roughly $4.6 trillion by market cap, Santa Clara, California-based Nvidia designs the chips, systems, and software that power everything from data centers to advanced AI models, making it the backbone of modern computing. Quarter after quarter, Nvidia has delivered eye-popping results, reinforcing its grip on the AI infrastructure stack and its reputation as the industry’s clear leader.
That dominance has carried straight into the stock’s momentum. NVDA has spent the year climbing relentlessly, punctuated by brief pauses rather than true breakdowns. After peaking at $212.19 in late October, the stock cooled by about 11%, a healthy reset rather than a trend shift. Even with that pullback, the bigger picture remains firmly intact, with shares up 32% over the past 52 weeks and nearly 15.65% in just six months, reflecting investors who remain confident in Nvidia’s long-term AI narrative, even as short-term caution creeps in.
From a technical standpoint, NVDA’s chart points to a healthy pause rather than any real weakness. The 14-day Relative Strength Index (RSI), which surged into overbought territory above 80 during October’s sharp rally, has cooled to 49.96. This reset suggests the stock is shedding excess enthusiasm and settling into a more balanced range. Trading volumes have also tapered off, matching the sideways price action and signaling consolidation, not heavy selling.
At the same time, the MACD oscillator remains supportive. The MACD line remains above the signal line, keeping the broader trend tilted in favor of buyers. The histogram stays in positive territory, indicating momentum has slowed, but downside pressure remains limited. Overall, the structure still favors stability over a breakdown.
NVDA stock looks expensive at first, trading at 40.31 times forward adjusted earnings, higher than most peers. But it is still below its own historical average, giving some perspective. The company keeps delivering strong double-digit growth and solid margins, which makes the premium feel more reasonable. Plus, looking at the forward PEG ratio, it is about 1.08 times – lower than the sector average and its long-term median – showing that the valuation is supported by real growth, not just hype.
Meanwhile, Nvidia has consistently rewarded shareholders, marking 13 consecutive years of dividend payments.
Nvidia Beats Q3 Projections
Nvidia’s third-quarter numbers, released on Nov. 19, were impressive. The stock jumped 2.85% after the company reported results that comfortably beat Wall Street expectations and paired them with upbeat guidance. Revenue surged 62.5% year-over-year (YOY) to $57.01 billion, while adjusted earnings rose 60.5% to $1.30 per share, proving that even at scale, Nvidia’s momentum has not slowed.
The data center business remained the powerhouse, climbing 66% annually to $51.2 billion, fueled by insatiable demand for AI. Networking added a spark of its own, with revenue soaring 162% to $8.2 billion as NVLink, InfiniBand, and Spectrum-X Ethernet gained traction. Gaming stayed steady, posting 30% growth, and the automotive segment quietly advanced 32% annually, showing broad-based strength.
In the first nine months of fiscal 2026, Nvidia returned $37 billion to shareholders through buybacks and dividends, with $62.2 billion still authorized as of the end of Q3. Cash, cash equivalents, and marketable securities rose to $60.6 billion as of Oct. 26 from $43.2 billion as of Jan. 26, 2025, while long-term debt fell to $7.5 billion, highlighting a strong balance sheet and disciplined capital management.
Management’s tone reinforced confidence. CFO Colette Kress highlighted Blackwell Ultra as the top-selling chip, while CEO Jensen Huang noted cloud GPUs are essentially sold out. Looking ahead, Q4 revenue is guided to roughly $65 billion, plus or minus 2%, keeping Nvidia’s growth story firmly intact.
Nvidia is set to release its Q4 report on Wednesday, Feb. 25. Analysts tracking the AI chip giant forecast its Q4 fiscal 2026 revenue to be $65.6 billion, and EPS is anticipated to grow 70.6% YOY to $1.45. For the full fiscal 2026, the bottom line is projected to increase 51.2% annually to $4.43 per share before rising by another 56.7% to $6.94 in fiscal 2027.
CES 2026 once again became Nvidia’s proving ground, as the world’s leading chipmaker pushed AI beyond screens and into the physical world. During his Las Vegas keynote, CEO Jensen Huang unveiled Alpamayo, a new autonomous-driving platform designed to give vehicles something closer to human reasoning. Built on Nvidia’s Cosmos foundation model and trained on millions of synthetic driving miles, Alpamayo is meant to help vehicles think through rare edge cases, navigate complex environments, and even explain their driving decisions.
The announcement lifted Nvidia’s shares as investors digested the broader ambition. Mercedes-Benz will debut the technology in its new CLA model, the first to run on MB.OS, arriving in U.S. showrooms in early 2026, with Europe and Asia to follow. Other adopters include Jaguar Land Rover, Lucid, and Uber, underscoring Nvidia’s growing influence across autonomous mobility and robotics.
Wall Street took note, particularly Stifel. Analyst Ruben Roy reiterated a “Buy” rating on NVDA and maintained a $250 price target, viewing the open-sourcing of Alpamayo as a strategic move. By making the core “science” available, Nvidia allows any automaker to build a competitive autonomous driving stack, widening the market for its data center chips used in training and its Drive hardware used in real-world inference.
Alpamayo effectively acts as a training hub, supplying high-quality data and teacher models that encourage developers to stay within Nvidia’s DRIVE AGX Hyperion and Blackwell/Rubin hardware ecosystem over time. This approach sets Nvidia apart from Tesla. Rather than building vehicles or operating robotaxi networks, Nvidia is positioning itself as the tech backbone for the entire autonomous vehicle industry, empowering multiple players and potentially intensifying competition in a space long led by Tesla.
Analysts are bullish about NVDA’s growth prospects, giving the stock a consensus rating of “Strong Buy.” Of the 48 analysts covering the stock, 44 advise a “Strong Buy,” while two suggest “Moderate Buy,” one advises a “Hold,” and only one suggests a “Strong Sell.”
The average analyst price target for NVDA is $256, indicating potential upside of 38.35%. Evercore ISI’s Street-high target price of $352 suggests that the stock could rally as much as 90% from here.
TSLA vs. NVDA: Which Stock Is The Better Buy?
Tesla might be leading the race in the autonomous vehicles space, but Nvidia may be building the racetrack. Tesla’s vision for robotaxis and autonomy remains bold, yet the stock tells a choppier story. Deliveries have slipped, valuation is still sky-high, and Wall Street’s tone has turned more cautious. There is upside if Tesla executes, but expectations leave little margin for error. Plus, Tesla offers no dividend, keeping returns tied purely to future growth.
Meanwhile, Nvidia has quietly taken the steadier lane. Its stock has outperformed, backed by relentless demand for AI chips and its growing role as the tech backbone for autonomous driving. It also pays a dividend, adding a layer of stability for long-term investors. Analysts remain strongly optimistic, seeing clearer earnings momentum ahead.
Taken together, Nvidia looks like the more dependable buy today, while Tesla remains a higher-risk, longer-horizon story.
On the date of publication, Sristi Suman Jayaswal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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