I have $30k to invest and I'm trying to decide between Tesla or Nvidia – which should I choose?

view original post

After another applause-worthy year for the Magnificent Seven companies, I don’t think they’ve become too magnificent not to own.

You don’t need to own all seven red-hot names (you’d have done incredibly well if you did, though!). But you should at least have some exposure to your favorite high-tech titans within the cohort, whether it be through index funds or picking your own. And though Tesla (NASDAQ:TSLA) and Nvidia (NASDAQ:NVDA) are arguably the “growthiest” and most exciting names in the Magnificent Seven, I’d argue that they’re also the riskiest of the batch, especially after posting explosive gains in the last year.

With TSLA and NVDA closing off 2024 with a bang, momentum chasers may be inclined to go with these pricier Magnificent Seven plays for a shot at keeping the good times going into 2025. And while Tesla and Nvidia may have more surprises (think unforeseen growth catalysts) in store over the coming years (robotaxis for Tesla and next-generation AI chips and software for Nvidia), investors should carefully evaluate each firm to ensure there’s a good chance of effectively growing into their respective high valuation multiples that are currently in place.

Undoubtedly, Tesla and Nvidia stand out as the pricier (but also growthier) of the Magnificent Seven. And while the two names have a lot going for them in the latter half of the decade, I must say that I’m a bigger fan of the other five Magnificent Seven names, especially if we run into a “tech wreck” sort of correction in the medium term. Indeed, if we are headed for a broad stock market pullback, the odds are that TSLA and NVDA stock will be hit even harder. If the bull keeps roaring loudly through 2025, though, TSLA and NVDA could amplify gains posted in the market.

In any case, let’s look at the case of a passive investor who went on Reddit in search of advice on whether they should buy TSLA, NVDA, or something else entirely with $30,000 as they seek to make the plunge into individual stock selection.

Tesla, Nvidia, or something else? How should a passive investor go about picking their first stock?

Between the two, NVDA stock seems to be the better long-term bet than TSLA as it looks to shrug off a correction and seize a “Blackwell bounce,” something I remarked on in a prior piece that some analysts see up ahead. As for TSLA, there’s a lot of hype surrounding Cybercab and Elon Musk’s role in government. Add the Model Q rumors into the equation, and it’s tough to tell what a fair price is to pay for the firm as it blasts off to new all-time highs. It’s hard (and highly unadvisable) to bet against Elon, but with a stretched multiple and ample expectations going into the new year, the stakes look to be the highest they’ve been in years, with TSLA shares trading at around 125 times forward price-to-earnings (P/E).

In any case, I think the individual with $30,000 to invest shouldn’t limit themselves to picking one stock with the sum. Since they’re already diversified, with S&P 500 ETFs elsewhere in their portfolio, and keen on picking a red-hot Magnificent Seven grower, I’m certainly not against placing all $30,000 in a single name. However, the best move may be to pick up a handful of Magnificent Seven names.

Why settle on just picking one name with $30,000?

Perhaps putting $10,000 into one Magnificent Seven name could make sense at current levels. Of course, I’d advise the passive investor to consult a financial advisor prior to going down the route of an active investor. Indeed, active investing won’t be everybody’s cup of tea, especially if one is more easily rattled by increased volatility and is keen on beating markets over the near- to medium-term.

With market valuations growing somewhat frothy, I do think there’s nothing wrong with staying passively invested in high-quality stock index funds rather than seeking to make a big splash in stock-picking. If one thinks they would have a better shot at picking their own names, perhaps it makes sense to dollar-cost average into single stocks over time. With a $30,000 sum, maybe that entails putting $2,000-5,000 to work on a name every few months as they construct their DIY portfolio.

In short, there’s nothing wrong with staying passively invested. However, if one is keen on getting started with stock picking, dollar-cost averaging makes more sense so that one won’t be tempted to get out once a correction hits.

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.