Tesla vs the Tech Giants
TSLA – One-trick Pony?
TSLA is essentially an Electric Vehicle (EV) company, albeit a very good one, and market leader. It innovates to control the whole ecosystem, e.g. fully self driving (FSD) software, batteries and charging tech, onboard entertainment, etc., but it is still within the confines of the EV ecosystem. While the sector is projected to have up to 23% CAGR through to 2027, the outlook beyond is murky.
What is certain is EVs will be the dominant form of vehicle sometimes in the future, and by that time, TSLA might find itself in a mature, saturated market with limited growth, just as legacy automakers the likes of Toyota, GM or Volkswagen faced today.
Further reading: Tesla Stock: 2022 Is The Moment Of Truth
5 Chinese Tech – Giants in their own fields
The five Tech giants are mammoth and have wide-moats in a diverse range of business areas, fuelled by online and Internet, which I think will not go away for decades to come. Their core business areas are summarised in the Table below.
Table showing the core business of the 5 Tech Giants
Further reading: Chinese wide-moat stocks at a discount
Where is the Pot of Gold?
Thus, if I have to choose between Tesla or the 5 Chinese Tech Giants to buy and hold, implying long term of 10 or more years, I would rather diversify my investment in different sectors than hedging my bet in just one sector, as the saying goes: "Plant many seeds, and see which ones grow and thrive". Practically, the Chinese Tech stocks are also in evergreen sectors, where we are consuming them daily or on more frequent basis, than buying or doing maintenance on EVs.
No doubt, the Chinese Tech stocks have seen their price and capitalisation beaten down recently and only started to be on the mend. However, in longer-term investing horizons, such price corrections and dips are to be expected, before the upwards trajectory resumes.
What matters are longer term growth and gains, and the proverbial "pot of gold" from the Chinese Tech giants might just be larger and deeper compared to Tesla, in my view.
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