Will the market be able to build on this on Friday and end the week on a high? Here are five things to watch:

ASX 200 expected to sink

The Australian share market looks set to fall on Friday following a disappointing night of trade in the United States. According to the latest SPI futures, the ASX 200 is expected to open 65 points or 0.75% lower this morning. In late trade on Wall Street, the Dow Jones is down 1%, the S&P 500 is down 1.3%, and the Nasdaq is 2.3% lower. Tesla (NASDAQ: TSLA) shares are down 14% and weighing heavily on the latter.

Oil prices jump

ASX 200 energy shares Santos Ltd (ASX: STO) and Woodside Energy Group Ltd (ASX: WDS) could have a great finish to the week after oil prices jumped overnight. According to Bloomberg, the WTI crude oil price is up 5.8% to US$91.87 a barrel and the Brent crude oil price is up 6.65% to US$100.33 a barrel. This was driven by reports that tankers were struck off Saudi Arabia.

Polynovo shares downgraded

Polynovo Ltd (ASX: PNV) shares will be in focus today after the medical device company was downgraded by the team at Bell Potter. According to the note, the broker has downgraded Polynovo's shares to a hold rating with a heavily reduced price target of $1.00 (from $2.00). It said: "We conclude that the top line growth rate is below our expectation and accordingly our target price is adjusted to reflect this change. Pending the full year earnings update, our initial reaction has been to slash the growth forecast to low double digit percentage growth going forward. For FY27 we now expect net sales to increase by ~$15m relative to the $20m increase achieved in FY26. We are particularly concerned by sequential period decline in US revenues in 2H26 in addition to the absence of a strategy in the outpatient care market."

Gold price tumbles

ASX 200 gold shares Evolution Mining Ltd (ASX: EVN) and Newmont Corporation (ASX: NEM) could have a poor finish to the week after the gold price tumbled overnight. According to CNBC, the gold futures price is down 2.5% to US$4,048.5 an ounce. Rate hike concerns are weighing on the precious metal. Also, Newmont will be releasing its quarterly update this morning.

Buy Generation Development shares

Morgans sees value in Generation Development Group Ltd (ASX: GDG) shares. In response to its fourth-quarter update, the broker has retained its buy rating with an improved price target of $6.89 (from $6.28). It said: "GDG has provided a 4Q26 update. We saw this as a strong result highlighted by record Investment Bond sales, and importantly, Evidentia beating expectations after a run of consecutive misses. We lift our GDG EPS by +1%-5% over the forecast period, on higher sales and FUM expectations in both key divisions. Our price target is set at A$6.89 (previously A$6.28). We maintain our BUY recommendation, with >20% TSR upside."

The post 5 things to watch on the ASX 200 on Friday appeared first on The Motley Fool Australia.

Before we get into this question, it's important to note that this is just my personal view, and could well be proven wrong. But let's go through what we know.

SpaceX is one of the many companies headed up by the controversial yet incredible Elon Musk. However, it is set to become only the second of Musk's companies to hit the public markets in an initial public offering (IPO) very soon. Musk famously already helms the electric vehicle and battery manufacturer Tesla Inc (NASDAQ: TSLA), which listed back in 2010 and has made some investors enormously wealthy.

SpaceX IPO to make history

SpaceX is set to float on the American NASDAQ exchange later this week on 12 June. It is expected to float at US$135 a share, and at a market capitalisation of US$1.77 trillion. With a 'T'.

That would immediately make it one of the largest IPOs in history, and make SpaceX one of the largest companies in the world right off the bat. It is to use the ticker code 'SPCX'.

SpaceX is famous for its cutting-edge rocket and space exploration technology. However, Musk has also lumped his artificial intelligence platform xAI into the company, as well as the social media site formerly known as Twitter, and now known merely as X.

According to CNBC, SpaceX is aiming for retail investors to receive about 30% of the shares being sold in its IPO. That's well above your typical float, which aims for 5-10%. Not just American retail investors either. Stock market participants all over the world are being invited to join this IPO. Our own CommSec platform has been offering retail investors on the ASX a shot at directly owning SpaceX shares after its float. Even my own beloved, yet usually-stock-market-agnostic, mother asked me about it last week.

As such, many Australians may have already signed up, hopeful that participating in this SpaceX IPO will make them wealthy.

I doubt that will happen.

Weighing the numbers against the hype

Why so serious? Well, there are a few red flags that I have noted that prompted this article.

Firstly, the conspicuous effort to include ordinary retail investors all over the world in this IPO could be construed as an effort to dial up the hype to 11. Musk is already a commanding figure in the investing world. Many loathe him, but many love him, perhaps thanks to his successes at Tesla. Many more may feel tempted to seemingly align their financial fortunes with those of Musk.

As the world's richest person, the ads sell themselves.

However, even if you call me old-fashioned, I think a company's numbers should speak louder than all else to attract IPO attention. Instead, it is Musk, his shiny company with the grand name, and his global army of spruikers that are attracting the attention.

If we actually dive into the numbers, there's a different tale to be told.

CNBC reports that SpaceX "generated [US]$18.7 billion in revenue last year and recorded an operating loss of [US]$4.2 billion". Yet we are being asked to invest in a company worth, according to its own estimates, almost US$2 trillion. For me, flags don't get redder than that.

I'm sure SpaceX is an exciting company with a trailblazing path ahead of it. But at that valuation? I see far more risk than reward. IPOs make many people rich. But it is usually not the investors who buy the shares at IPO. Instead, the rewards go to the insiders selling their shares at IPO, and the brokers and bankers that underwrite the process. The investors on the other side may get what's left, but, as I've written about before, are often just left holding the bag.

Foolish takeaway

I'm not saying SpaceX shares will plunge when they hit the market. Depending on the hype, there's every chance they go 'to the moon'. However, I think it is likely that once the hype dies down and the SpaceX IPO becomes old news, the shares will be less than US$135 each. As investing pioneer and Warren Buffett mentor Benjamin Graham once said: "In the short run, the market is a voting machine, but in the long run, it is a weighing machine".

I wouldn't be surprised if investors 'vote' SpaceX shares higher when they hit the market. But I would be surprised if they weigh them afterwards and find they are truly worth a total of US$1.77 trillion.

I could be wrong, of course. No crystal balls here. But I wouldn't touch this IPO with a ten-foot pole, and unless you know far more about SpaceX than I do, I would recommend an abundance of caution to all.

The post The SpaceX IPO will make lots of people rich. Just not you appeared first on The Motley Fool Australia.

Even if you have never invested in the likes of Microsoft Corporation (NASDAQ: MSFT) or Amazon.com Inc (NASDAQ: AMZN), chances are you have used their products or services, probably recently. Ditto with Alphabet Inc (NASDAQ: GOOG)(NASDAQ: GOOGL), Meta Platforms Inc (NASDAQ: META) and Apple Inc (NASDAQ: AAPL). Tesla Inc (NASDAQ: TSLA) and NVIDIA Corporation (NASDAQ: NVDA) are a little more niche. Even so, these last two of the seven are still household names, and possibly household presences.

Despite the ubiquity of the Magnificent 7 in Australian daily life, far fewer Australians would own shares of them directly. Saying that, international stock market investing has never been more popular in Australia. If an investor does own international stocks, there is a high chance that at least one of them will be a Mag 7 stock.

Personally, I directly own shares in five of the Magnificent 7. In fact, I have owned all seven of these ocmpaneis at various points (although never simultaneously).

Until quite recently, I thought of these positions as a small, although valuable portion of my overall portfolio. However, after a recent audit, I have discovered that I am far more invested in these seven stocks than I previously supposed.

The dominance of the Magnificent 7 stocks

It starts with an exchange-traded fund (ETF) that I own. As I have previously discussed, I recently sold my holdings in the BetaShares Nasdaq 100 ETF (AS:X NDQ) to buy a similar, but far cheaper ETF in the Schwab U.S. Large-Cap Growth ETF (NYSE: SCHG).

All seven of the Magnificent 7 are core holdings of this fund. As they are in almost every major US-based ETF listed on the ASX. That includes the iShares S&P 500 ETF (ASX: IVV) and the Vanguard MSCI Index International Shares ETF (ASX: VGS). Not to mention NDQ. Magnificent 7 stocks also sometimes pop up in the Schwab U.S. Dividend Equity ETF (NYSE: SCHD) and the iShares Core Dividend Growth ETF (NYSE: DGRO), which are also in my portfolio.

So that's three.

Next, one of my largest investments is the listed investment company (LIC) MFF Capital Investments Ltd (ASX: MFF). This Buffett-esque LIC is a long-term holding of mine, and a favourite investment. As it happens, Alphabet, Amazon, Microsoft and Meta Platforms are all large positions in MFF's portfolio. That's four.

These components routinely pop up in yet another of my favourite, long-term holdings. That would be the VanEck Morningstar Wide Moat ETF (ASX: MOAT). That's five major personal investments that are exposed to at least one Mag 7 stock. Outside my direct ownership of five of the Magnificent 7 stocks.

Don't forget about your superannuation

The cherry on the cake comes in the form of my superannuation fund. Like most Australians, my super is partially invested in US stocks. And the Magnificent 7 are at the top of that list, too.

As it turns out, these seven US tech titans are far heavier in my portfolio and my overall wealth than I had previously thought.

I do view most of the Magnificent 7 as companies of the highest calibre. You don't get to where they are now without being truly exceptional. As such, this high exposure doesn't bother me.

However, there's a big chance that other ASX investors out there are in the same boat. Thus, it may be worth checking out your own investments and seeing just how deep the Mag 7 goes. My exposure tolerance to these seven stocks may be higher than yours.

The post ASX investors: Are you overinvested in the Magnificent 7 without knowing it? appeared first on The Motley Fool Australia.

If you haven't heard of SpaceX, it is the (for now) private space technology and exploration company helmed by Elon Musk.

Musk is most widely known for his leadership of electric vehicle, battery and robotics company Tesla Inc. However, SpaceX is also a Musk enterprise. And we could be getting some details about its public markets debut as soon as this week.

According to reporting from Forbes, SpaceX "will likely make public its paperwork" this week as it aims for a 12 June IPO on the American NASDAQ exchange.

It could be the largest IPO in history, with Musk reportedly looking to raise as much as US$75 billion and valuing SpaceX at a gargantuan US$1.75 trillion. This could, in turn, make Musk the world's first trillionaire. He is already worth more than US$800 billion, so he's really just a hop, skip, and jump away from 'the big T' already.

SpaceX is home to some of the world's most exciting technology, including xAI, Starlink, and SpaceX's cutting-edge rocketry. As such, there will be plenty of investors who would relish the thought of owning SpaceX stock if it does IPO. That potentially includes many Australians. However, Australian investors will need to cross the proverbial pond and purchase shares directly on the US stock market is they wish to get a piece of the action directly.

Saying that, there will probably be another way for Australians to invest in the SpaceX IPO without owning US stock if they so wish.

Using ASX ETFs to buy SpaceX after IPO

It's by investing in exchange-traded funds (ETFs), of course.

ETFs are one of the simplest ways that Australian investors can buy US stocks without leaving the comfort of our local market. As it happens, a space-themed ASX ETF launched on the ASX just last week. It is none other than the BetaShares Space Industry ETF (ASX: RCKT).

As it sname implies, this ASX ETF offers Australian investors a portfolio of global stocks that are all leaders in the space industry. At present, RCKT's portfolio includes Rocket Lab USA Inc, Firefly Aerospace Inc, and Planet Labs PBC.

Of course, it does not contain SpaceX, at least yet, as the company has still not IPO-ed. However, I would be shocked if SpaceX doesn't make this ETF's cut as soon as it is eventually listed. So once we do know when the SpaceX IPO will occur, keep an eye on this ETF's holdings to see if it pops up. If it does, RCKT will probably be the easiest way ASX investors can buy shares of SpaceX.

The post Is this the easiest way to invest in the SpaceX IPO on the ASX? appeared first on The Motley Fool Australia.

Broad index exchange traded funds (ETFs) tend to reflect where the market is today. More targeted ETFs can tilt towards where growth and returns may come from over the next decade.

Here are three ASX ETFs that offer that potential and were recently recommended by the team at BetaShares:

BetaShares Nasdaq 100 ETF (ASX: NDQ)

The first ASX ETF that could be a market-beater is the BetaShares Nasdaq 100 ETF.

This fund leans into companies that are shaping consumer behaviour and digital infrastructure. It is less about the overall economy and more about where innovation is happening at scale.

Its holdings include companies such as Netflix (NASDAQ: NFLX), Adobe (NASDAQ: ADBE), and Tesla (NASDAQ: TSLA).

Adobe is a good example of how these businesses evolve over time. It has transitioned from one-off software sales to a subscription-based model, creating recurring revenue and improving margins. That ability to adapt is a common feature across many Nasdaq leaders.

With technology continuing to influence how industries operate, the BetaShares Nasdaq 100 ETF could be an ETF to hold for the long term.

BetaShares Global Robotics and Artificial Intelligence ETF (ASX: RBTZ)

Another ASX ETF to look at is the BetaShares Global Robotics and Artificial Intelligence ETF.

This ETF focuses on automation, which is a theme that is becoming more important as companies look to improve productivity and reduce reliance on labour.

Its holdings include companies such as Fanuc Corporation (TYO: 6954), Intuitive Surgical (NASDAQ: ISRG), and Keyence Corporation.

Keyence stands out for its high-margin business model. It develops sensors and automation equipment used in manufacturing, with a strong focus on efficiency and precision. Its products are embedded in production processes, which can make demand more resilient over time.

As automation expands across industries, the BetaShares Global Robotics and Artificial Intelligence ETF could be destined to outperform over the long term.

BetaShares Asia Technology Tigers ETF (ASX: ASIA)

A final ASX ETF worth considering for the long term is the BetaShares Asia Technology Tigers ETF.

This ETF provides exposure to large technology companies across Asia, where digital adoption continues to accelerate.

Its holdings include companies such as Meituan (SEHK: 3690), PDD Holdings (NASDAQ: PDD), and Samsung Electronics.

Meituan is an interesting one. It operates a platform that connects consumers to services such as food delivery and local retail, building scale through network effects. Its growth reflects how digital ecosystems are developing differently across Asia.

With innovation and consumption trends continuing to evolve in the region, the BetaShares Asia Technology Tigers ETF could be a top long-term pick.

The post 3 ASX ETFs with market-beating potential over the next 10 years appeared first on The Motley Fool Australia.

Investing in electric vehicle (EV) related shares on the ASX began gaining traction in the late 2010s. This was driven largely by global momentum from companies like Tesla Inc (NASDAQ: TSLA). It was also influenced by increasing demand for battery minerals such as lithium. 

By the early 2020s, ASX investors were heavily backing lithium producers and battery supply chain companies. This turned EV exposure into a prominent growth theme.

Recent oil price surges have once again reignited debate over the growth potential of lithium producers and EV companies. 

A new report from Global X suggests the moment has arrived for the electric economy – spanning electric vehicles (EVs), lithium, clean energy, and energy storage systems (ESS).

EVs and battery technology appear to have finally crossed the threshold of no return, with the next phase of growth set to unfold at a materially faster pace than in recent years.

The perfect storm

According to Global X, the arrival of an energy crisis in the form of the Iran War may prove to be the catalyst that re-ignites the fire under EV adoption.

The report said that cost parity has been the key inflection point for EV adoption. 

The logic is straightforward: as EVs become just as cheap to buy and own as petrol vehicles, their superior technology and day-to-day performance should be enough to drive widespread switching.

However, we believe this is most likely not sufficient. What this framework overlooks is the stickiness of ingrained consumer behaviour, including a natural scepticism toward new technologies. For example, according to our analysis, the average all-in cost of an EV in 2025 was already approximately $875 cheaper than that of a comparable petrol vehicle over a typical 10-year ownership period.

Global X said that as of April 2026, the first signs of the EV re-acceleration are already appearing in sales figures and export numbers. 

Australia saw EVs take its highest share of sales ever in March, and in a more global metric, Chinese EV exports for March jumped more than 170% year-over-year.

EV adoption accelerating

Global X argues that the world is moving along a path of deglobalisation. 

As a result, commodities, including energy, are becoming more politicised and increasingly vulnerable to disruption. 

The Iran War has merely exposed these vulnerabilities and may act as a catalyst for countries to address and better manage risks in the future.

For most nation states without reliable domestic access to energy resources, the rational response is to accelerate investment in renewable infrastructure such as wind and solar. Central to this buildout are Energy Storage Systems (ESS), which not only store excess generation but also smooth out the inherent intermittency of renewable supply.

Global X Battery Tech & Lithium ETF (ASX: ACDC)

These catalysts are contributing to the outperformance of the Global X Battery Tech and Lithium ETF. 

In 2026 alone, the fund has rocketed nearly 20% higher. 

Over the last 12 months, it is up 120%. 

The fund offers investors exposure to global companies developing electro-chemical storage technology and mining companies producing battery-grade lithium.

Global X believes this alignment of consumer economics and national strategy is defining a new day for EV investment. While the pace of change may not be linear, the direction of travel appears increasingly set.

The electric economy is no longer reliant on favourable conditions to grow. It is being pulled forward by necessity.

The post Global X says it's time to target this electric vehicle ASX ETF that has doubled in a year appeared first on The Motley Fool Australia.

IVV ETF has been a popular choice among investors seeking exposure to the roaring US stock market over the past three years.

IVV is now the third largest ASX ETF out of more than 400 on the market, with more than $11.67 billion invested in it.

However, last month, IVV ETF recorded the highest investment outflows, indicating an exodus amid the Iran war.

Aussie investors took $461 million out of the exchange-traded fund (ETF) in March, based on ASX data analysed by Betashares.

However, investors have not given up on US shares, with $232 million flowing into IVV ETF's currency-hedged counterpart in March.

That's the iShares S&P 500 AUD Hedged ETF (ASX: IHVV), which is up 1.62% to $62.68 per unit today.

This indicates investors still want US exposure but are mindful of the weaker USD against the stronger AUD today.

Stronger Aussie dollar weakens IVV ETF returns

The Australian dollar has risen almost 20% from just over 60 US cents 12 months ago to a three-year high of 70.8 US cents today.

As James Gruber, Equity Market Strategist at CommSec, explains:

When the Australian dollar strengthens, your international ETF returns shrink, and if the Australian dollar weakens, your returns improve.

To put that into perspective: last year, the S&P 500 delivered total returns of 17.88%, but IVV ETF investors received just 10.75%.

The US dollar has weakened due to expectations of interest rate cuts, concerns over the impact of tariffs, and geopolitical uncertainty.

Meanwhile, the AUD has strengthened given Australia has entered a tightening rate cycle, with two rate hikes so far in 2026.

There is also strong demand for our commodities, which foreign buyers purchase with Australian dollars, amid a new mining boom.

Investors prefer IHVV over IVV today because hedged ETFs reduce the impact of currency movements on investments. 

Gruber explained:

For example, you may invest in an ETF that tracks the S&P 500 index. If it is unhedged and if the Australian dollar strengthens after you buy it, your returns in AUD may drop, even if the underlying investments do well in their home currency. 

Conversely, if the Australian dollar declines, the value of an unhedged ETF may rise in AUD terms, assuming the underlying asset holds or increases in value.

Gruber points out that currency-hedged ETFs typically cost more than unhedged ETFs.

Case in point: IHVV has management fee of 0.1% while IVV has a fee of 0.03%.

US shares vs. ASX 200 in 2026

The S&P 500 has substantially outperformed the S&P/ASX 200 Index (ASX: XJO) over the past three years.

But change is afoot this year.

So far in 2026, the S&P 500 has lifted 0.6% while ASX 200 shares have increased 2.9%.

Gruber points out that a key difference between the two benchmark indices is their exposure to technology companies.

That's significant because a global tech wreck is underway, as investors fret over the impact of artificial intelligence (AI).

Illustrating the difference, the IVV ETF is 34% tech stocks, while the ASX 200 has just a 3% exposure to technology.

Gruber said:

… the S&P 500 leans heavily on technology stocks. 

If you add the likes of Amazon and Tesla – classified as consumer discretionary stocks in the S&P – and Meta and Alphabet – included in the communications sector – to the technology sector, then tech accounts for more than 40% of the S&P 500 index. 

The post Why ASX investors dumped IVV ETF last month appeared first on The Motley Fool Australia.

The outperforming stock in question is minerals and technology company Syrah Resources Ltd (ASX: SYR).

Syrah Resources shares closed on Friday at 17 cents. In early morning trade on Monday, shares are swapping hands for 18 apiece, up 5.9%.

Here's what's catching investor interest.

ASX All Ords stock lifts on Tesla extension

Syrah Resources shares are marching higher after the minerals and technology company released an update on an alleged default that could scuttle its offtake agreement with Tesla Inc (NASDAQ: TSLA).

The offtake agreement is for the supply of natural graphite active anode material (AAM) from Syrah's 11.25 thousand tonne per annum (11.25ktpa) Vidalia AAM facility, located in the US state of Louisiana.

The ASX All Ords stock first inked the offtake agreement with Elon Musk's EV company in December 2021.

But in July 2025, Tesla sent a notice alleging that Syrah had defaulted on its obligation to provide conforming AAM samples from Vidalia. At the time, Tesla said Syrah Resources had to cure the alleged default by 16 January this year, or the US car-making giant could terminate the offtake agreement on 9 February.

However, Tesla later extended that deadline to today, 16 March, to give the two companies more time to collaborate. Syrah Resources continues to insist that it is not in default under the offtake agreement.

And it looks as if the two companies may yet reach an understanding on the issue.

This morning, the ASX All Ords stock revealed that the parties have extended the cure date to 1 June, and said that they are "closely collaborating to cure the alleged default".

Tesla can then still terminate the offtake agreement if final qualification of the Vidalia AAM is not achieved by the new deadline.

The extended agreement remains subject to the consent of the United States Department of Energy.

What's been happening with Syrah Resources?

The ASX All Ords stock reported its second-quarter results (Q2 FY 2026) on 28 January.

Highlights included a 34% quarter-on-quarter increase in natural graphite production at its Balama project to 34,000 tonnes, with Syrah reporting strong recovery and quality.

The ASX All Ords stock sold and shipped 29,000 tonnes of natural graphite to third-party customers, up 21% from Q1, achieving a weighted average price of US$577 per tonne (CIF).

Commenting on the results on the day, Syrah Resources CEO Shaun Verner said:

Syrah's operational highlights for the fourth quarter included stable operations at Balama with excellent recovery and completion of further large-volume breakbulk shipments to Indonesia in addition to further container shipments. We aim to continue Balama production and sales momentum in 2026.

We are demonstrating high quality AAM product performance, setting up our Vidalia AAM facility to meet the very high standards in materials processing necessary in the battery manufacturing industry.

The post Guess which ASX All Ords stock is jumping higher today on big Tesla news appeared first on The Motley Fool Australia.

Shares in the Aussie graphite producer closed on Friday trading for 30.5 cents. In morning trade on Monday, shares are swapping hands for 28.7 cents apiece, down 5.9%.

For some context, the All Ordinaries Index (ASX: XAO) is down 0.1% at this same time.

Here's what's happening.

ASX All Ords mining stock catching Tesla headwinds

Investors are pressuring Syrah Resources shares today following an update on its offtake agreement with Tesla Inc (NASDAQ: TSLA).

The offtake agreement with Elon Musk's EV company is for the supply of natural graphite active anode material (AAM) from Syrah's 11.25 thousand tonne per annum Vidalia AAM facility, located in the US state of Louisiana.

The ASX All Ords mining stock initially executed the offtake agreement with Tesla back in December 2021.

On 30 July 2025, Syrah announced to the market that Tesla had sent a notice alleging that Syrah had defaulted on an obligation under the agreement to provide conforming AAM samples from Vidalia.

Following an amended notice, Tesla required Syrah to cure the alleged default by last Friday, 16 January, or risk the termination of the offtake agreement. Tesla has the right to terminate the agreement if final qualification of Vidalia AAM is not achieved by 9 February.

Syrah stated that it does not accept that it is in default under the offtake agreement.

However, in news that has yet to lift the ASX All Ords mining stock today, the company said that it is closely collaborating with Tesla to cure the alleged default. In light of the collaborative efforts, the two companies have agreed to amend the offtake agreement to extend the potential termination date to 16 March.

The amended agreement remains subject to the consent of the United States Department of Energy.

What's the latest from Syrah Resources?

Syrah Resources reported its first quarter (Q1 FY 2026) results on 28 October.

Among the highlights, the ASX All Ords mining stock produced 26,000 tonnes of natural graphite at its Balama mine and processing facility, located in Mozambique.

Over the three months to 30 September, the miner sold and shipped 24,000 tonnes of natural graphite to third-party customers at an average price of US$625 per tonne.

Commenting on the quarterly performance on the day, Syrah CEO Shaun Verner said:

Syrah's operational highlights for the third quarter included the safe ramp-up of operations at Balama following the extended non-operating period and the completion of large-volume breakbulk shipments to Indonesia and the US.

As for its US operations that involve the offtake agreement with Tesla, Verner noted, "The company's successful capital raising in July better positions us to manage market volatility and extended AAM qualification processes at Vidalia."

The post ASX All Ords mining stock sinking on big Tesla news appeared first on The Motley Fool Australia.

Only two Mag 7 shares delivered impressive capital growth, while the other five underperformed the major US indices.

Yep, they underperformed.

The health of the Mag 7 companies matters to Australian investors because we are heavily invested in them, whether we like it or not.

Got a superannuation fund? Chances are a chunk of your retirement savings are invested in these seven high-tech companies.

Own exchange-traded funds (ETFs) tracking the US or global markets?

You're definitely invested in the Mag 7 stocks.

The Mag 7's high market caps mean they dominate the S&P 500 Index (SP: .INX) and the Nasdaq Composite Index (NASDAQ: .IXIC).

Therefore, their performance has a direct impact on many Australians' investments.

Let's take a look at how the Magnificent 7 stocks performed in 2025, starting with the No. 1 riser.

And no, it's not the stock you think!

Magnificent Seven stocks in 2025

To set the scene for you, the S&P 500 rose 16.39% and the Nasdaq Composite lifted 20.36% last year. (Compare that to ASX shares here.)

Here's how the Magnificent Seven stocks compared to the broader market.

1. Alphabet Inc Class A (NASDAQ: GOOGL)

Both Class A and Alphabet Inc Class C (NASDAQ: GOOG) shares lifted 65% in 2025.

Class A stock closed at US$313 per share, and Class C shares closed at $313.80.

Nvidia Corp (NASDAQ: NVDA)

US stock market darling Nvidia still put in a good performance as it continues to leverage the artificial intelligence megatrend.

Stock in the US graphics and AI chip designer rose 39% to close at US$186.50 per share on 31 December.

In October, Nvidia became the first company in the world to reach a US$5 trillion market cap.

Investment platform Stake reports that Nvidia was one of the five most traded US stocks by Australian traders last year.

According to Stake's 2025 Retail Investor Report Card:

It beat revenue estimates every quarter in 2025 by an average of 8.9% and is on track to generate US$212B in FY26.

Its earnings have become a global market catalyst: Nvidia's results serve as a directional signal for traders worldwide.

For Stake investors, the biggest 'buy-the-dip' moment came during the DeepSeek moment in January, when Nvidia lost US$260B in market cap but buy orders surged 460%.

Microsoft Corp (NASDAQ: MSFT)

The Microsoft stock price rose 15% to close 2025 at US$483.62 per share.

Meta Platforms Inc (NASDAQ: META) 

Meta Platforms shares rose 13% to finish the year at US$660.09.

Tesla Inc (NASDAQ: TSLA)

Stock in electric vehicle manufacturer Tesla rose 11% to US$449.72 per share.

Stake analysts said Tesla was the only Magnificent Seven stock not to set a new share price record in 2025.

Apple Inc (NASDAQ: AAPL) 

US technology stock Apple rose by 9% to close at US$271.86 per share on 31 December.

Amazon.com, Inc. (NASDAQ: AMZN) 

The Amazon share price inched 5% higher to close at US$230.82 on 31 December.

Interesting sidenote

My US Fool colleague Trevor Jennewine recently covered the third-quarter report from Warren Buffett's Berkshire Hathaway Inc (NYSE: BRK.A) (NYSE: BRK.B).

The report showed that the 'Oracle of Omaha', who retired at the end of last year, bought Alphabet stock — the best performer of the Magnificent Seven in 2025 — and continued to sell down Apple — the second-worst performer of the group — during the third quarter.

Berkshire Hathaway purchased 17.8 million shares in Alphabet, which now accounts for 2% of the company's $267 billion portfolio of 41 stocks.

Berkshire sold 41.7 million Apple shares, and although the company remains Berkshire's largest holding at 21%, its position has reduced by 74% in just two years.

The post Here's how the US Magnificent Seven stocks performed in 2025 appeared first on The Motley Fool Australia.

The coming year is shaping up to be a pivotal one for Tesla (NASDAQ: TSLA), and it will be a year in which the underlying debate about the future of the electric vehicle (EV) industry will come into intense focus. There are two polemic positions that automakers and investors can take on the debate, but as ever, the reality probably lies somewhere in between.

The good news for Tesla investors is that the company has the opportunity to emerge victorious, regardless of the outcome. 

The great debate over electric vehicles

The crux of the matter was outlined during Tesla's third earnings call in 2024 when management fielded a question on the timing of a $25,000 "non-robotaxi regular car model." Musk's response was to reiterate that "the future is autonomous electric vehicles," which he then claimed most automakers hadn't "internalized" yet. He went on to argue that "I think having a regular $25,000 model is pointless" and "It's fully considered cost per mile is what matters."

Musk is arguing that the lower cost per mile advantage of EVs becomes apparent when the car is driven. Moreover, if the car driven is an autonomous EV in the form of a robotaxi, then that advantage is even higher. Consequently, the most efficient use of an EV is as a robotaxi.

In terms of cost per mile, you could think of matters as follows: Tesla Cybercab robotaxi > Tesla transformed into robotaxi using autonomous full self driving (FSD) > EVs (including Teslas) > regular internal combustion engine (ICE) car > ICE taxi.

Estimates for the cost per mile fluctuate due to external factors (such as fuel costs), but for a rough idea, Musk has mentioned as low as $0.30 per mile for a Cybercab, compared to an average of over $2 for an ICE taxi.

There are a couple of points to consider in addition to this argument. First, a Tesla with autonomous FSD has the potential to have a lower cost per mile than other EVs because the software can drive it in a more efficient manner.

Second, and this is a crucial point in the ICE world, the ICE taxi is the more expensive option on a cost-per-mile basis, which is a major reason why consumers buy cars. However, in the EV world, a consumer will see a robotaxi as a cheaper option on a cost-per-mile basis.

As such, the advent of robotaxis will usher in a fundamentally different way of thinking about mobility than applied in the ICE era.

Tesla's robotaxi plan is to build that future, and investors are buying the stock in anticipation of a massive stream of recurring revenue from its robotaxis in the future. That's why Tesla is aggressively pursuing its robotaxi rollout.

The market needs cheaper electric vehicles

The alternative view has it that the immediate future of the EV industry (the growth area of the auto market) is through the development of low-cost models to reduce the overall cost of ownership. That's why Ford (whose management, in 2016, promised commercial robotaxis by 2021) is investing $5 billion in a universal EV platform, with the aim of offering a $30,000 electric pickup truck in 2027.

Moreover, Ford and General Motors (an automaker that only ended robotaxi development in 2024) are among many automakers that have scaled back their pre-existing EV plans in response to weaker-than-expected sales in 2025 and significant losses on their EV investments.

They believe they are responding to consumer preferences, and the near future will feature the kind of affordable EVs that Musk thought were "pointless," as discussed above.

Which side is right?

They are probably both right, at least in the near term.

The costly Cybertruck and Ford's F-150 Lightning pickup truck have underperformed in sales, while Tesla's most affordable car, the Model 3, has seen sales growth of nearly 18% through 2025, and GM's affordable Chevy Equinox has also experienced strong sales growth. At the same time, the pace of robotaxi rollouts, adoption, and regulatory approval is uncertain and slower than most hoped it would be.

However, Tesla and others are making progress on robotaxis, and the long-term case remains intact. It appears to be an issue of timing. 

Why Tesla could win either way

But here's the thing. Tesla is well-positioned to strategically win in the long term with its robotaxi development, and it's arguably best positioned to win in the near term if the transition takes longer than expected. Unlike peers like Ford and GM, Tesla's EV business is profitable, and in fact, it's already producing lower-cost versions of the Model Y and Model 3 in reaction to market conditions.

It also has the market position and scale to develop lower-cost models. While that's no guarantee that Tesla will produce one if the robotaxi transition is slow, the company is in a much better position to do so than its peers, and that counts for a lot in the investing world.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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At the time of writing, the S&P 500 Index (SP: .INX) is up 17% and the Nasdaq Composite Index (NASDAQ: .IXIC) is up 21% for 2025.

Meanwhile, the ASX 200 is up 6%.

Many Australian investors, particularly younger generations, own US stocks via broad-based exchange-traded funds (ETFs).

However, some investors still prefer to buy US shares directly in the hope of outsized returns.

Investment platform Stake has revealed the top five most traded US stocks by its Australian customers in calendar year 2025.

Let's take a look.

Most traded US stocks of the year

1. NVIDIA Corp (NASDAQ: NVDA)

The Nvidia share price closed at $187.54 overnight and has risen 40% in 2025.

According to Stake's 2025 Retail Investor Report Card:

Nvidia officially became the world's largest company this year – its market cap reaching a peak US$4.93T in November.

Despite landing in the short-seller crosshairs of Michael Burry, the firm proved AI demand isn't going anywhere.

It beat revenue estimates every quarter in 2025 by an average of 8.9% and is on track to generate US$212B in FY26.

Its earnings have become a global market catalyst: Nvidia's results serve as a directional signal for traders worldwide.

For Stake investors, the biggest 'buy-the-dip' moment came during the DeepSeek moment in January, when Nvidia lost US$260B in market cap but buy orders surged 460%.

2. Tesla Inc (NASDAQ: TSLA) 

The Tesla share price closed at $454.24, up 12.5% over the year.

Stake analysts summed up Tesla's performance in 2025:

Tesla shares managed a [12.5%] YTD gain despite declining sales, margin compression, and intensifying competition from Chinese EV makers like BYD. It was the only member of the elite Mag7 group to not hit a record high this year.

Investors who are still bullish are banking on Tesla's autonomous driving or 'robotaxi' tech and future-oriented business lines.

Another bright spot for its balance sheet was its energy and storage revenue, which hit US$3.41B in Q3 with a 31.4% gross margin.

The biggest day of $TSLA buying on Stake was 5 June, amid a very public feud between CEO Elon Musk and President Trump over a Republican budget bill eliminating EV tax credits.

3. Palantir Technologies Inc (NASDAQ: PLTR)

This US artificial intelligence stock rode the wave of rising global defence spending in 2025.

The defence software developer closed at $180.84 per share overnight, up 139% in 2025.

Stake analysts said:

Palantir has been one of the best performing stocks in 2025, recording a 140% YTD gain on the back of record earnings and major government contracts. It landed a US$10B software contract with the U.S. Army alongside multi-year deals with AI enterprise clients.

CEO Alax Karp swiped at critics who called him 'batshit crazy' in an earnings call where the firm raised full-year guidance.

But the short sellers are circling: on 18 Aug, Citron Research said a US$40 share price would be generous for $PLTR, effectively implying its trading 80% higher than fair value.

It was also the day Stake traders bought the most $PLTR this year.

4. Amazon.com Inc (NASDAQ: AMZN)

The Amazon share price closed at $232.53 overnight, up 6% this year.

Stake analysts commented:

Amazon hasn't seen the most significant share price growth in 2025, trailing the S&P 500 and the Nasdaq. That didn't stop investors from trading large volumes of this stock, particularly during moments of turbulence following the Liberation Day tariff announcements.

Despite the high capex spend on AI infrastructure, its high-margin AWS segment grew 20% YoY to US$33B in Q3.

AWS and advertising growth make Amazon's future less dependent on traditional retail cycles, but more reliant on cloud and AI demand.

5. Advanced Micro Devices Inc (NASDAQ: AMD)

US semiconductor stock, Advanced Micro Devices, closed at $215.34 apiece overnight, up 78% this year.

According to Stake's report:

AMD saw multiple re-ratings from analysts this year as it transitioned from being seen as a CPU/GPU maker for PCs to a major player in AI and data centre infrastructure.

The turning point might have been its multi-year strategic partnership with OpenAI, leading to a 30% rally – its best day since 2016.

Stake investors took the opportunity to lock in profits, with the 6 October seeing the largest sell volume on record.

AMD has also been eating away at Intel's x86-based chip market share. It accounts for 30% of that market, providing demand for its CPUs is still strong in a year where CEO Lisa Su claimed its AI chips can match Nvidia's performance.

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In typical fashion, shares of Tesla (NASDAQ: TSLA) have exhibited extreme levels of volatility, swerving between lanes of pessimism and optimism. But through its wild ups and downs, the top purveyor of electric vehicles (EVs) has performed well in 2025. Shares are up 22% this year (as of Dec. 22), and they trade near record levels.   

The automotive disruptor is in the early innings of some huge projects that could reshape its entire financial picture. But there are strong arguments on both the bull and bear sides of the debate here. So, should you buy this EV stock before 2026? 

Tesla is working on innovations that could provide a long-term financial boost

Autonomous driving technology is the project that investors are most focused on. Tesla has a history of overpromising and under delivering -- not only on the capabilities of its full self-driving (FSD) technology, but also on the timeline of when features will be launched.

The business took a step forward in June, when its robotaxi ride-hailing service started in Austin, Texas, even though it was in a very limited and restricted capacity. Tesla's robotaxis are also in the San Francisco Bay Area, and there are plans to enter a handful of new cities in 2026.

Elon Musk said on the second-quarter 2023 earnings call that its robotaxi service could have "quasi-infinite" demand. Obviously, the total addressable market is huge, as people all over the world need to get from point A to point B.

Tesla believes that as costs come down and safety improves, most people won't need to buy their own cars anymore. And that could bring high-margin revenue from its FSD software on a global level, both from a dedicated company-owned robotaxi fleet and from customers who choose to let their EVs be used in the ride-hailing service.

The company is also focused on expanding production of its humanoid robot, known as Optimus. The goal is to boost the annualized output to 1 million of these by the end of next year. Besides handling certain tasks in factory settings, these machines can have consumer applications.

Again, Musk isn't shy when it comes to his forecast; he believes that robotics will one day represent 80% of his company's market value.

The market is exuberant over this struggling car company

The EV company has never traded in line with its automotive peers. The stock has a price-to-earnings ratio (P/E) of 329. Detroit automakers Ford Motor Company and General Motors trade at P/E multiples of 12 and 17, respectively. And supercar luxury brand Ferrari can be purchased at a P/E of 38. So Tesla is on another planet.

The market's excitement shows just how convinced investors are that Musk's company will make good on its promises, namely that its FSD software and its robots can drive unprecedented financial success at some point down the road This could happen, but no one has any idea when.

At the current valuation, Tesla isn't a smart buying opportunity before the calendar turns to 2026. Investors would be paying a nosebleed P/E for a struggling business. Automotive revenue gains have disappointed, and profit margins have been dwindling.

There are notable headwinds getting in the way. The EV market is more crowded these days, making it harder for Tesla to stand out. In the U.S., the end of the $7,500 tax credit for EVs can also definitely pressure demand, forcing consumers to think if paying up for one is worth it.

The market for Tesla's vehicles has exhibited slower growth recently than industry experts had hoped for. Perhaps we're past the phase of early adopters rapidly buying EVs, a group that was easy to sell to. The next chapter of growth could be more difficult to come by since it can be challenging to convince certain consumers to make the switch from gas-powered or hybrid vehicles when the experience or the economics aren't as compelling.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Tesla (NASDAQ: TSLA) has been a fantastic stock for long-term investors, with returns exceeding 3,100% over the past decade. However, the company currently faces significant headwinds, as sales of its electric vehicles (EVs) are slowing, costs are rising, and it places big bets on unproven markets including robotics and autonomous vehicles (AVs).

It's no surprise, then, that many investors are trying to determine what to do with Tesla stock. Is it a good time to buy with its shares priced under $500, or is it too early to take a risk on the company transitioning toward future technologies when its EV business is slumping?

Here are three reasons why I believe it's best not to buy Tesla stock right now. 

1. Expenses are rising fast

Tesla CEO Elon Musk is transitioning his company toward an autonomous vehicle and robotics company. The idea is for Tesla to mass-produce its Optimus robots -- up to 1 million by 2030 -- and for the company to vastly expand its fledgling robotaxi service that's currently only in a handful of cities. It's worth noting Musk said in July the service would cover half the country by the end of the year, which is now, and it's nowhere near achieving this.

There's nothing wrong with Tesla focusing on these two opportunities, considering that AVs could eventually be worth $1.4 trillion by 2040, and humanoid robotics will be worth an estimated $5 trillion by 2050.

But to achieve its goals, Tesla is spending heavily, and it's likely to increase from here. The company's operating expenses rose by 50% to $3.4 billion in the third quarter, and research and development (R&D) costs jumped 57% to $1.6 billion. Management specifically said the operating cost increase was "driven by SG&A [selling, general, and administrative], AI and other R&D projects."

For Tesla to expand into nascent robotics and AV markets, additional billions of dollars will need to be spent at a time when the company's core business -- selling electric vehicles -- isn't doing so hot.

2. Tesla's core business is suffering

It's easy to get caught up in Tesla's big plans to be an autonomous vehicle and robotics company, but Tesla is still primarily an electric vehicle company right now. Unfortunately, business is not so good.

Tesla's net income fell 37% to $1.4 billion in the third quarter, leaving the company with significantly less money to reinvest in the business.

Things could be getting worse, too. Following the expiration of the federal EV tax credits, Tesla's vehicle sales fell below 40,000 in November -- its lowest monthly sales in years. Tesla's third-quarter results temporarily received a boost as customers rushed to take advantage before credits expired at the end of September, which helped lift Tesla's revenue 12% to $28 billion in the quarter.

However, the November vehicle sales numbers indicate that Tesla and other EV manufacturers have a significant problem on their hands. EVs often cost more than traditional gas-powered vehicles, and after years of inflation and high interest rates, and no more tax credits, there's less demand for EVs than in the recent past.

This would be a significant problem on its own for Tesla, but it's compounded by the fact that the company is spending so much to move into robotics and AVs.

3. Its stock is expensive

Even if Tesla somehow pulls off its transition to AVs and robotics and turns around its stumbling EV business, it doesn't eliminate the fact that investors are paying a high premium for a company as it makes risky moves.

Tesla's shares currently have a price-to-earnings ratio of 206, far above the tech sector's average P/E ratio of about 45.

This means Tesla's stock is already priced for perfection at a time of significant transition, falling profit, and increasing expenses. That's too risky for my liking, even if Tesla eventually achieves its goals. I think investors are better off not buying Tesla stock right now, at least waiting until the company can prove that it can reinvigorate sales and earnings from its electric vehicle business.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Tesla (NASDAQ: TSLA) and its CEO and significant shareholder, Elon Musk, frequently make the news. It's not always positive, with Musk's potentially $1 trillion dollar pay package vote garnering sharp reactions.

But looking purely at the stock's performance, how much would you have today had you invested $5,000 in Tesla shares a year ago? 

A volatile stock

Tesla's stock has certainly been volatile. The shares have a 52-week low of $214.25 and a high of $488.54.

Through the ups and downs over the last year, Tesla's share price rose 8.8% through Dec. 11. However, the S&P 500 index went up 13.4%. While Tesla doesn't pay dividends, the S&P 500 had a total return of 14.8% after including the payouts.

That means your $5,000 investment would be worth $5,444. That's below the $5,737 if you'd invested passively in the S&P 500.

A look ahead

Tesla's stock has certainly rewarded investors with market-beating returns over the long term. Over five years, the shares' 126% appreciation beat the S&P 500's 102.4% return.

With growing competition in the electric car industry and U.S. tax incentives disappearing, its core automotive business' growth has slowed. Third-quarter automotive revenue increased 6% year over year to $21.2 billion.

Musk has promised a future of artificial intelligence, robotics, and self-driving cars. It's unclear if and when these initiatives will pay off. Given the long wait and current climate for its core business, I'd pass on Tesla shares right now. For those investing, you should prepare yourself for the stock's wild price swings. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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For long-term investors, one way to harness these forces is through exchange-traded funds (ETFs) that provide diversified exposure to the stocks driving them.

Here are three ASX ETFs that tap directly into megatrends that look set to run for decades.

Betashares Cloud Computing ETF (ASX: CLDD)

The shift to the cloud is no longer a future trend, it is now core infrastructure for the global economy. Businesses are increasingly moving data storage, software, and computing power away from offline systems and into scalable, cloud-based platforms.

The Betashares Cloud Computing ETF provides exposure to companies enabling this transformation. Its holdings include cloud software and infrastructure leaders such as Microsoft Corp (NASDAQ: MSFT), ServiceNow (NYSE: NOW), and Shopify (NASDAQ: SHOP). These businesses sit at the centre of enterprise digitisation, e-commerce, and workflow automation.

As data usage grows and artificial intelligence (AI) workloads expand, demand for cloud services is likely to keep compounding over time, making the Betashares Cloud Computing ETF a pure-play way to access that structural shift. It was recently recommended by analysts at Betashares.

Betashares Global Robotics and Artificial Intelligence ETF (ASX: RBTZ)

Automation and artificial intelligence are rapidly becoming essential productivity tools. Labour shortages, rising costs, and the need for efficiency are pushing companies to invest heavily in robotics and AI-driven systems.

The Betashares Global Robotics and Artificial Intelligence ETF targets businesses leading this transformation. Its portfolio includes Nvidia Corp (NASDAQ: NVDA), a key supplier of AI computing hardware, Intuitive Surgical (NASDAQ: ISRG), a pioneer in robotic-assisted surgery, and ABB Ltd (SWX: ABBN), a global leader in industrial automation.

This is a megatrend driven by necessity rather than hype. As economies digitise and industries modernise, robotics and AI adoption is likely to accelerate across healthcare, manufacturing, logistics, and services. It was also recently recommended by the team at Betashares.

Global X Battery Tech & Lithium ETF (ASX: ACDC)

Electrification is transforming transport, energy storage, and power generation, and batteries sit at the heart of that transition. The Global X Battery Tech & Lithium ETF provides exposure to the stocks building the supply chain behind electric vehicles and renewable energy storage.

Its holdings span miners, battery manufacturers, and technology leaders such as Tesla Inc (NASDAQ: TSLA), Albemarle Corp (NYSE: ALB), and Contemporary Amperex Technology Co Ltd (CATL). Together, they reflect the end-to-end ecosystem required to support the global shift away from fossil fuels.

With governments and consumers pushing toward cleaner energy solutions, and battery costs continue to fall, demand for battery technology and lithium materials could grow strongly for many years. This bodes well for the companies held by this fund.

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Tesla (NASDAQ: TSLA) might be one of the more difficult stocks to own comfortably due to the amount of volatility there has been in its share price, but it has been a huge winner for some investors over the years. Its successful phases have made it into one of the world's most valuable companies, with a market cap of close to $1.5 trillion.

The electric vehicle (EV) maker's stock is up by around 105% in the past five years, and it's within reach of the all-time high it touched last December. Should investors buy Tesla while it's below $500? 

Imagine a completely different future

The bullish view of Tesla is that it is transforming into a software, robotics, and artificial intelligence enterprise. This is precisely how CEO Elon Musk wants investors to think about the business. 

Tesla has long-term optionality with its robotaxi operations, which are currently carrying paying passengers in Austin and the San Francisco Bay Area in a controlled capacity, with more cities to come. The objective here is to get that business going in a lot more markets -- not only in the U.S., but internationally as well. The premise assumes that as demand and usage pick up, costs as a share of revenues would come down. The best outcome would be for Tesla to generate a colossal amount of recurring, high-margin revenue from driverless cars.

Humanoid robots might be an even bigger opportunity -- Musk estimates that business could help Tesla reach a market cap of $25 trillion. It appears that there could be a market for these devices among commercial clients that would use them in factory settings. There might also be demand from consumer households.

In short, a decade from now, Tesla might look totally different from how the company looks today. However, when looking strictly at its current situation, it's not easy to always be optimistic. Tesla's revenue growth has slowed dramatically due to a combination of intensifying competition, higher interest rates, and a public backlash among some consumers over Musk's forays into politics. Profits have been under pressure, too: Its Q3 2025 operating margin of 5.8% was down sharply from the 10.8% margin it produced in the prior-year period.

Is Tesla stock overvalued or undervalued?

It can be difficult for investors to effectively gauge the valuations of a company like Tesla. Based on traditional metrics, like its price-to-sales ratio of 17 or the price-to-earnings ratio of 304, the stock is ridiculously overvalued. One would only expect investors to buy shares of a company trading at such lofty premiums if it were putting up remarkable financial performances, delivering monster growth and significant profits. Yet Tesla hasn't been operating at a high level recently.

Viewed in this light, the shares are extremely expensive. But of course, Tesla is a story stock. The market's actions today are defined by narratives, which can clearly have huge impacts on share prices. Tesla and Musk get so much attention for their innovativeness and forward-thinking that it makes sense that many investors are believers.

If Tesla's self-driving vehicles and robots prove successful in a reasonable time frame, then the stock's current valuation might very well end up looking like a bargain in retrospect. Earnings could grow substantially, lifting the stock up.

Whether it will achieve that favorable outcome, though, is far from clear. Tesla will need to execute in a near-flawless fashion, and not just from the technological and manufacturing perspectives. It will need cooperation from regulators and legislators. And there's no certainty that its future products will see the type of customer adoption that the bulls predict.

Moreover, a critic could argue that Tesla's current valuation essentially prices in a great deal of the optimistic forecast for success. Only investors who are able and willing to take on a lot of risk in their portfolios should even consider buying this EV stock now. While there is a chance that the investment could be a profitable one over the longer term, it's impossible to accurately assess. Risk-averse investors would be better off avoiding Tesla at these levels.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Over the past six months, Tesla (NASDAQ: TSLA) and Alphabet (NASDAQ: GOOGL) have both delivered eye-catching gains as investors seemingly crowd into anything tied to AI (artificial intelligence). Tesla shares are up more than 45% in that span, while Alphabet has climbed nearly 70% and is closing in on a $4 trillion market capitalization.

The stories behind those moves look very different. Tesla is still primarily an electric vehicle company trying to reinvent its future around autonomous driving and humanoid robots. Alphabet, meanwhile, generates cash from search advertising, YouTube, and a fast-growing cloud computing business -- and it is threading AI into all of these offerings.

Both companies could end up major winners from AI in 2026 and beyond. Yet when valuation and these companies' underlying business fundamentals are weighed together, Alphabet arguably looks like the better option for investors looking for more investment exposure to AI. 

Tesla: AI could transform its business

The bull case for Tesla stock these days hinges less on boosting electric vehicle sales and more on converting its AI efforts into scalable software and services. At least, that's the only way to explain the stock's valuation, which features a price-to-earnings ratio of just over 300 as of this writing. Tesla's autonomous driving network (Robotaxi), its autonomous driving subscriptions, and its humanoid robot efforts (Optimus) sit at the center of that ambition.

Recent financial results, however, highlight the gap between that vision and today's reality.

In the first half of this year, Tesla's revenue fell 10.6% year over year to $41.8 billion as automotive sales dropped almost 18%. Third-quarter results improved, with revenue rising about 12% year over year to $28.1 billion. But operating income still declined about 40% -- and operating margin for the period was only 5.8% (down from 10.8% in the year-ago period). In addition, the rebound in sales trends may prove to be temporary, because the period benefited from a pull-forward in demand as consumers rushed to place orders before the federal electric vehicle credit expired on Sept. 30.

Management has been clear that AI is a major reason profitability remains under pressure. Not only has it been a significant driver of research and development spending recently, but management expects AI to weigh on its business next year.

"On the [capital expenditures] front," said Tesla chief financial officer Vaibhav Taneja in the company's third-quarter earnings call, "while we are expecting to be around $9 billion for the current year, we're projecting the numbers to increase substantially in 2026 as we prepare the company for the next phase of growth in terms of not just our existing businesses, but our bets around AI initiatives, including Optimus."

This spending may pay off if Tesla can scale and commercialize its Robotaxi network and move Optimus from demonstrations to meaningful production. For now, however, almost all of Tesla's revenue still comes from its cyclical auto business, as well as its smaller but fast-growing energy business.

Alphabet: More profitable and cheaper

Alphabet's AI push looks more incremental but also more durable than Tesla's. Google Search and YouTube already rely heavily on machine learning to match users with relevant information and ads, and Alphabet's cloud computing business, Google Cloud, is selling AI infrastructure and tools directly to customers. Overall, Alphabet's move to integrate AI across its business seems to be creating an inflection in revenue growth.

Alphabet's third-quarter revenue rose 16% year over year to $102.3 billion, with Google Cloud up 34% and both search and YouTube delivering solid growth as new Gemini-powered features rolled out across the portfolio.

Profitability and cash flow help the story.

Alphabet's earnings per share in Q3 increased more than 35% year over year, and Alphabet generated about $48.4 billion in cash from operations during the period, bringing the total for the first nine months of 2025 to more than $112 billion. Cash and marketable securities on the balance sheet sit around the $98.5 billion mark, and the company continues to return capital through share repurchases and a modest dividend while still funding heavy AI investment.

Like Tesla, Alphabet's management expects its investments to rise from already high levels due to AI. Indeed, not only did management lift its full-year outlook for capital expenditures when it reported its third-quarter results, but it said it expects "a significant increase" in capital expenditures next year. Investments to support its AI-capable compute power for Google Cloud represent the primary driver for its capital expenditures.

The better bet for 2026 and beyond

Ultimately, the scale tips in favor of Alphabet for two primary reasons.

First, Alphabet's business is more established than Tesla's and is able to generate substantial profits -- and do so on a more consistent basis.

More importantly, however, the Google parent has a much cheaper valuation than Tesla's. Alphabet trades at 31 times earnings, and Tesla's price-to-earnings ratio is just over 300. Even when looking at price relative to analysts' consensus forecasts for earnings per share over the next 12 months (forward price-to-earnings), the chasm between the two remains massive. Alphabet trades at about 23 times forward earnings, and Tesla trades at close to 200 times forward earnings.

Sure, Tesla and Alphabet both hold significant promise when it comes to AI's impact on their businesses next year (and beyond). Tesla's upside rests on breakthroughs in full self-driving and robotics that could eventually reshape its economics. But the company is navigating a challenging environment in autos and a stock price valuation that is borderline egregious. Meanwhile, Alphabet faces its own risks, including regulatory scrutiny and the chance that its massive AI infrastructure doesn't pay off as well as expected. Still, its combination of strong cash generation, a cash-rich balance sheet, and a much lower valuation multiple arguably makes it the more attractive way to participate in AI heading into 2026. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Electric carmaker and robotaxi company Tesla (NASDAQ: TSLA) is one of the largest companies in the stock market, led by CEO Elon Musk, one of the most prolific tech founders of our time.  

Tesla is the first company to widely commercialize electric vehicles, which are viewed as a critical innovation in helping to wean the planet off of fossil fuels that have greatly contributed to global warming. While Tesla's core EV business has struggled due to rising competition and fewer government incentives, investors are now more focused and extremely excited about Tesla's autonomous ride-hailing fleet, full self-driving technology, and Optimus humanoid robots. 

This explains why the stock now trades at a massive valuation of around 200 times forward earnings. Investors believe Tesla is on the groundbreaking level of new industries with massive markets, and that Tesla will be able to gobble up market share with its first-mover advantage.

The bulls have been right so far

Tesla remains one of the most disputed battleground stocks on Wall Street. And while many, including myself, are skeptical about continuing to buy the stock at such a rich valuation, the bulls have prevailed so far.

TSLA data by YCharts

As you can see in the chart, $3,500 invested in Tesla at the end of 2013 is now worth nearly $174,000 for a total return of 4,869%. Meanwhile, the same $3,500 invested in the broader benchmark S&P 500 (SNPINDEX: ^GSPC) is only worth $13,320, which is still a strong return.

While Tesla's future is uncertain, the bulls have now been right for many years. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Peter Thiel is a legendary personality in the tech space. He's a cofounder of PayPal and Palantir, and was one of Facebook's (now Meta Platforms) first outside investors. That's an impressive resume, and makes following his investment moves a wise idea.

During Q3, Thiel's fund made two surprising moves: It sold a ton of Tesla (NASDAQ: TSLA) stock and completely exited its Nvidia (NASDAQ: NVDA) position. In its place, he purchased Apple (NASDAQ: AAPL) and Microsoft (NASDAQ: MSFT). 

Those are some interesting moves, but are they the right ones? Let's find out. 

Peter Thiel is sitting on a large pile of cash after Q3

There are many reasons why someone might sell a stock. The most obvious is that they've lost faith in a position or feel that a stock has gotten overvalued, and it's time to move on. Another possibility for someone like Peter Thiel is that he may have found something else more lucrative to invest in. Lastly, Thiel could be making a substantial purchase and just wants the money to fund that.

However, there's only one reason why Thiel is purchasing stocks like Microsoft and Apple: He thinks they will go up.

To determine if he rolled the money from Tesla and Nvidia into Microsoft and Apple, let's look at the sales and buys and see if it was a direct transfer or if he's sitting on a big pile of cash. Determining exactly when Thiel sold the stocks isn't possible, so we need to make a few assumptions.

During Q3 2025, Tesla's stock traded at a low of $294, an average of $347, and a high of $445. Nvidia's stock traded at a low of $153, an average of $174, and a high of $187. That's a wide range of prices Thiel could have sold at, so we'll use the average to determine the total dollar figure of the sales.

Thiel sold nearly 208,000 shares of Tesla during Q3, which works out to about $72 million worth of Tesla stock. He sold 538,000 shares of Nvidia in Q3, which is $94 million worth of Nvidia stock.

Switching gears to Microsoft and Apple, he owned zero shares of each during Q2, so it's easy to figure out the average value of these investments. With Thiel owning 49,000 shares of Microsoft and 79,000 shares of Apple, these two positions would have cost him about $25 billion for the Microsoft purchase and $18 billion for the Apple purchase.

That is nowhere near the amount of money he cleared from the Tesla and Nvidia sales, so it's fairly obvious that Thiel is sitting on a big pile of cash after his Q3 transactions. He may use that to invest in an exciting artificial intelligence (AI) or even a quantum computing start-up, or he could be getting worried about the valuation of the market.

Either way, the move from Nvidia and Tesla conveys that he's de-risking his portfolio. Microsoft and Apple are much safer stocks than Tesla or Nvidia, so this move is clearly a defensive one. However, I don't think one of the moves was correct.

The move to sell Nvidia and buy Apple is questionable

While I have no problem selling Tesla to buy Microsoft, the biggest question for me is: Why would he sell Nvidia to buy Apple? Apple is growing at an incredibly slow pace, with revenue rising at less than 10% for multiple years. Contrast that with Nvidia, which has delivered explosive growth for several years and isn't slated to slow anytime soon due to massive data center buildouts.

NVDA Revenue (Quarterly YoY Growth) data by YCharts

Despite this massive growth mismatch, Apple and Nvidia trade for nearly the same valuation when next year's forward earnings are considered.

NVDA PE Ratio (Forward 1y) data by YCharts

To me, Nvidia looks like the much better stock to buy and hold, but Peter Thiel also has a longer and far more legendary track record than I do. This mismatch of ideas is what makes the market, and investors need to do their own research and thinking to determine if a move like selling Nvidia and buying Apple is right for them. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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