Should you forget Tesla and buy these 2 artificial intelligence (AI) stocks right now?

Unlock the AI Revolution: Why These Two Powerhouses Outshine Tesla for Your Portfolio

The electric vehicle landscape is shifting, and with it, the investment narrative around once-dominant players. While Tesla faces headwinds with declining EV sales and commercially challenging new models like the Cybertruck, the true frontier of innovation and investment opportunity lies increasingly within Artificial Intelligence. Even Elon Musk's personal focus appears to be branching into AI through xAI, separate from Tesla.

For savvy investors looking to capitalize on the transformative power of AI, it’s time to look beyond the fading star of traditional EV manufacturing. We're zeroing in on two AI titans, ASML and Alphabet, whose strategic positions, robust financials, and compelling valuations make them far more appealing prospects right now.

ASML: The Unseen Architect of the AI Boom

Every advanced computer chip, from those powering the latest AI models to the intricate systems within data centers, owes its existence to highly specialized manufacturing equipment. This is where ASML Holding comes into play. ASML is the undisputed global leader in lithography machines for semiconductors, particularly its cutting-edge extreme ultraviolet (EUV) systems. These systems are not just highly sought after; they are currently the only way to produce the most advanced computer chips at scale, including those designed by industry giants like Nvidia.

This unique position grants ASML immense leverage and a significant demand tailwind from the burgeoning AI sector. As companies pour billions into developing sophisticated AI capabilities, the need for more powerful chips only intensifies, driving chipmakers to expand capacity worldwide. ASML stands to be the primary beneficiary.

Despite recent market jitters stemming from tentative guidance and U.S. tariffs, ASML’s financial outlook remains incredibly strong. The company projects a healthy 15% net sales growth this year, with ambitious revenue targets of €44 billion to €60 billion ($51.5 billion to $70.3 billion) by 2030. Furthermore, ASML expects its already impressive gross margins (over 50%) to climb even higher, potentially exceeding 60% as production scales. This could translate into operating margins soaring to 40%, a significant leap from the recent 36%.

Consider the potential: 40% operating margin on a $70.3 billion revenue forecast translates to a staggering $28 billion in operating income. Compared to its current market capitalization of approximately $280 billion, ASML's earnings potential suggests its stock is undervalued, especially after its recent dip. With a price-to-earnings (P/E) ratio of just 26, it offers a much more attractive entry point than many of its high-growth peers, and certainly a more grounded valuation than Tesla.

Alphabet: Powering AI from Cloud to Consumer

If ASML builds the foundations, Alphabet (Google) is one of the architects filling the digital skyscrapers with AI. As a leading AI company, Alphabet is a massive consumer of advanced computer chips and, by extension, a key driver of demand for ASML’s machines. With an ecosystem that includes Google Search, YouTube, and the rapidly expanding Google Cloud, Alphabet is uniquely positioned to leverage this historical AI opportunity.

On the consumer front, Alphabet is already seeing immense traction. New AI-powered products like Google AI Overviews and the Gemini chatbot are experiencing an extreme increase in usage. Crucially, only a handful of companies possess the in-house computing infrastructure required to support such a vast user base simultaneously. This deep integration of AI into its core services not only enhances user experience but also promises to drive Google Services revenue to new heights, as demonstrated by its 10% year-over-year growth to $77 billion last quarter.

Perhaps even more compelling is Alphabet's strategic investment in its Google Cloud platform. By spending years building out advanced chips and data centers specifically optimized for AI computing, Google Cloud is now a formidable contender in the cloud market. It's rapidly gaining market share, with revenue increasing by an impressive 28% year-over-year to $12.3 billion last quarter. While smaller than Google Services today, Google Cloud’s runway for growth is immense as AI continues to proliferate across virtually every software industry in the coming decade.

Even as one of the world's largest companies, Alphabet's strategic pivot and deep integration of AI across its diverse portfolio signal significant future revenue and earnings potential. With a highly appealing P/E ratio of just 21, Alphabet presents a compelling investment case, offering a blend of stability, innovation, and substantial growth prospects in the AI era.

A Clear Choice for Forward-Thinking Investors

The comparison is stark. While Tesla’s P/E hovers north of 180, reflecting significant speculative premium, ASML and Alphabet offer robust fundamentals and clear growth trajectories in the very field that is defining the next technological revolution. ASML, with its P/E of 26, and Alphabet, at 21, are not only growing but also represent foundational and application layers of the AI landscape.

Tesla, at present, is struggling with growth and betting on unproven future technologies with high execution risk. Meanwhile, ASML is the indispensable supplier enabling the AI industry's expansion, and Alphabet is both driving consumer adoption of AI and providing the essential cloud infrastructure for businesses. For investors seeking tangible value and exposure to the undeniable AI boom, considering a reallocation from speculative bets like Tesla to proven, growing entities like ASML and Alphabet could be a highly beneficial strategic move for your portfolio.