Amazon vs. Tesla: Which Stock Is the Better Buy for the Long Term?

Elon Musk and Jeff Bezos, the CEOs of Tesla and Amazon, are the two richest individuals on the planet, behind only the family of Bernard Arnault. With respective net worths of $188.5 and $192.8 billion, they’ve clearly benefited from the stratospheric rises in their companies’ stock prices. But as you’ll hear constantly repeated on Wall Street, past performance is not a guarantee of future results.

So the question remains, which stock — Tesla or Amazon — is the better buy going forward? Here’s a look at where the stocks have been, the pros and cons that currently affect them and what analysts think can happen from here.

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Historical Performance

Here are the performance stats for Tesla and Amazon over the past one-, three-, five-, 10- and 15-year periods.

Tesla

One-year return: -9.35%
Three-year average annual return: -11.50%
Five-year average annual return: 54.87%
10-year average annual return: 26.66%
15-year average annual return: N/A

Amazon

One-year return: 81.31%
Three-year average annual return: 4.22%
Five-year average annual return: 15.29%
10-year average annual return: 25.03%
15-year average annual return: 29.94%

Despite the extreme variability in the performance of these two stocks, their 10-year average annual return is quite close.

YTD Performance

On a year-to-date (YTD) performance thus far in 2024, Tesla has been absolutely slaughtered, down over 34%. This makes Tesla the worst-performing stock in the entire S&P 500 on a year-to-date basis.

Amazon, on the other hand, has had a banner year in 2024, up 14.8% YTD as of March 15. This more than doubles the S&P 500’s YTD return of 7.17%.

Analyst Forecasts

Currently, 32 Wall Street analysts follow Tesla stock, and they have a consensus “buy” rating on the company. Their average 12-month price target is $207.30, marking a potential gain one year out of about 27%.

Amazon is covered by 47 analysts who have a consensus “strong buy” on the stock. The average 12-month price target is $208.48, nearly identical to the forecast for Tesla. But in the case of Amazon’s stock, that projection only amounts to a potential gain of just under 20%.

Amazon: Pros and Cons

In spite of its recent runup, Amazon still has a lot going for it. In addition to being the absolute go-to for online shopping of all types, Amazon actually generates a lot of its income from its cloud services division, Amazon Web Services. AWS already controls roughly one-third of the entire world’s cloud computing service revenue, and that looks likely to expand. The company is also expanding into digital advertising, which could prove to be another generous revenue stream. Amazon recently joined the venerable Dow Jones Industrial Average, solidifying its position as one of the market’s 30 leading stocks.

For some investors, however, Amazon becoming a member of the Dow suggests that its growth years are behind it, and that it is transforming into — or has already become — a slow-growing blue-chip stock. With a price-earnings ratio north of 60x and future growth not as stellar as in its infancy, there could be some valuation risk in the stock, especially after an 80% gain over the past year.

Tesla: Pros and Cons

Tesla’s transformation of the EV industry has been nothing short of miraculous, but now the company has to deal with something new — competition. A victim of its own success, nearly every car maker in the world is now jumping into the field, giving consumers more choice. In the meantime, EV sales themselves have been slowing, and Tesla’s own price cuts are trimming the company’s margins. According to analysts, the news is almost entirely bad around Tesla, from decelerating sales to a potential Q1 delivery miss, slashed earnings estimates and deteriorating margins.

On the plus side, many legendary investors believe that the best time to buy a stock is when people are abandoning it. Warren Buffett himself is famous for his quote that you should be “greedy when others are fearful.” While Buffett hasn’t issued an opinion on Tesla’s stock, the philosophy could be sound. In 2025, for example, Tesla intends to release a $25,000, next-generation electric vehicle, and if it’s a hit, all could be well with Tesla once again. If that all pans out, investors may lament not picking up shares at current prices.