Tesla or SpaceX: Which Musk-Led Company is a Better Investment Now?

World's richest man Elon Musk leads two of the most closely watched companies on the market: Tesla TSLA and SpaceX SPCX, spanning electric vehicles (EVs), autonomous vehicles (AVs), robotics, energy storage, artificial intelligence (AI), satellite communications and space exploration.

Tesla, which went public in 2010, transformed the EV industry and has since evolved into a broader technology company. After years of losses, it reported its first annual profit in 2020. As competition in EVs intensifies, Tesla's next phase of growth increasingly depends on autonomous driving, robotics and AI.

SpaceX made its historic market debut in June, pricing its shares at $135. The stock surged to a peak of $225.64 within days before erasing those gains and now trades more than 50% below its high. The company enjoys a strong competitive position in commercial launch services, while Starlink has emerged as its primary growth engine.

Both stocks trade at steep valuations, with much of their value driven by investor expectations for future technologies. Operating in large, fast-growing markets, both companies offer compelling long-term growth opportunities, but they also face significant execution risks. Heavy capital spending is also weighing on cash flows, with no clear timeline for when these investments will generate meaningful returns.

Let's take a closer look at which stock could be the better investment today.

The Tesla Narrative

Tesla's core automotive business has shown signs of stabilizing, with vehicle deliveries returning to growth. However, automotive margins remain under pressure due to lower vehicle pricing. The energy business is also witnessing margin compression despite growing deployments. Tesla is expanding storage capacity through a new Megapack factory near Houston while preparing to launch its next-generation Megapack 3 system later this year.

The bigger investment story lies beyond vehicle sales. Full Self-Driving (FSD) continues to gain traction, with paid subscribers rising 56% year over year to 1.48 million in the last reported quarter. Robotaxi service is now live in seven U.S. metros, with unsupervised operations ramping in Austin, Dallas, Houston, Miami, Orlando and Tampa. The company reported more than 380,000 unsupervised Robotaxi miles across six cities with no notable incidents. Cybercab production has begun, and Optimus humanoid robot manufacturing lines are being installed, although the production ramp will be gradual.

Tesla's balance sheet remains one of its biggest strengths. The company ended the second quarter with $43.5 billion in cash, cash equivalents and short-term investments. However, massive capex is pushing the free cash flow into negative territory. Management expects capital spending to exceed $25 billion in 2026 and continue rising over the next two to three years.

The Zacks Consensus Estimate for Tesla’s 2026 and 2027 EPS implies year-over-year growth of 8% and 31%, respectively. However, the EPS estimates have moved south over the past 30 days, reflecting that analysts remain cautious about the timing and profitability of Tesla's AI-driven initiatives.

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The SpaceX Narrative

SpaceX's first quarterly report as a public company was released on Aug. 4. Revenues surged 92% year over year, with all three operating segments—Connectivity, AI and Space—delivering growth.

Connectivity remained the largest contributor, driven by Starlink, whose subscriber base doubled year over year to 12 million. The AI business emerged as the fastest-growing segment, supported by the launch of Grok 4.5, the planned acquisition of Cursor and a growing cloud business with $14.1 billion in contracted sales. The Space business completed 78 launches in the first half of 2026, while Flight 13 met all objectives, paving the way for V3 Starlink satellites on future Starship missions.

Adjusted EBITDA nearly tripled to $3.5 billion, led by strong gains in the Connectivity and AI businesses. However, losses widened in the Space segment as the company continued investing heavily in Starship and other long-term initiatives.

Like Tesla, SpaceX is prioritizing long-term growth over near-term cash flow. Capex surged sixfold year over year to $18.4 billion in the second quarter, with spending expected to remain elevated over the next two quarters. At the same time, investors are watching the company's first insider lockup expiration due today, which could temporarily pressure the stock as additional shares become eligible for trading.

Despite these near-term headwinds, management remains optimistic, with Musk projecting that SpaceX could generate $1 trillion in annual revenues by 2030.

The Zacks Consensus Estimate calls for a loss of 54 cents per share in 2026, followed by EPS of 66 cents in 2027. Encouragingly, loss estimates have narrowed over the past 30 days.

Image Source: Zacks Investment Research

Our Take

Both TSLA & SPCX stocks carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Tesla's long-term growth hinges on successfully commercializing robotaxi, FSD, Optimus and its rapidly expanding energy storage business. If these bets pay off, they could create high-margin recurring revenue streams beyond EVs. Its lower valuation offers investors a greater margin of safety.

SpaceX, however, has the edge. The company sits at the intersection of several fast-growing markets like satellite communications, AI, cloud infrastructure, defense and space exploration. And its strong revenue growth outpaces Tesla's core business momentum. While execution risks remain, its broader addressable markets, stronger near-term growth and greater long-term optionality make it the more compelling investment.

For investors willing to tolerate higher risk, we would recommend choosing SpaceX over Tesla.

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This article originally published on Zacks Investment Research (zacks.com).

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