We recently published a list of 10 Best Blue Chip Stocks to Buy for 2025. In this article, we are going to take a look at where Tesla, Inc. (NASDAQ:TSLA) stands against other best blue chip stocks to buy for 2025.
Both conservative and risk-tolerant investors favor blue chip stocks due to their solid business models, impressive track records, and attractive risk-reward profiles. These stocks are backed by companies with strong brand names and reputations that generate dependable earnings and consistent dividends, which provide stability and passive income during turbulent market conditions.
In recent years, Wall Street has become reliant on the best blue chip stocks. While the S&P 500 was up by about 24% in 2024, most of the gains were driven by gains in seven of the biggest blue chip stocks. The “Magnificent 7” stocks, which include seven of the biggest companies by market cap, accounted for a 13.7% point gain in the S&P 500. Therefore, investors who focused on these stocks ended up generating significant gains.
The trend is not expected to change in 2025. Blue chip companies should be the biggest beneficiary as the Federal Reserve cuts interest rates and the new administration under Donald Trump pushes for fewer regulations. The easing of regulatory pressure that has taken a significant toll on tech giants should be a boon to see blue chip stocks edge even higher. David Miller, co-founder at Catalyst Funds, expects blue chip stocks to continue leading the way in 2025.
“The Mag 7 stocks are generating significant growth in terms of revenue and earnings power,” he said earlier this month. “These companies are massive monopoly businesses with strong fundamental tail winds. I have no reason to believe that the Mag 7 names won’t continue to dominate the S&P in 2025.”
Valuations among the blue-chip stocks have gotten out of hand after two years of blockbuster gains amid the artificial intelligence frenzy. Blue chip companies boast significant profits and a competitive edge to back their valuations up, however.
“The Magnificent Seven are not pie-in-the-sky companies: They’re generating “tremendous” revenue for investors”, said Fitzgerald, principal and founding member of Moisand Fitzgerald Tamayo. “How much more gain can be made is the question,” he added.
Therefore, any well-diversified investment portfolio should include some of the best blue chip stocks. It’s the only way investors can take advantage of the market rally that’s driven by various factors, including the artificial intelligence frenzy, robust economic growth and friendly monetary policy.
Our Methodology
To make our list of the 10 best blue chip stocks to buy for 2025, we analyzed the market, focusing on large market cap companies (more than $100 billion) with well-established, financially sound businesses. We then examined their performance over the past year, focusing on the underlying fundamentals that make them stand out. Finally, we ranked these companies in ascending order based on their 12-month return in 2024.
At Insider Monkey, we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Is Tesla, Inc. (TSLA) the Best Blue Chip Stock to Buy for 2025?
Tesla, Inc. (NASDAQ:TSLA) is an auto manufacturer that designs, develops, leases, and sells electric vehicles, energy generation and storage systems. It is one of the best blue chip stocks to buy for diversifying an investment portfolio amid growing demand for electric vehicles. The company’s outlook is looking increasingly positive especially on EV sales in China, increasing by 8.8% in 2024. The increase came in one of the most challenging years as the US EV giant faces regulatory challenges and stiff competition.
Tesla, Inc.’s (NASDAQ:TSLA) total EV deliveries in 2024 totaled 1.79 million vehicles. Robust sales have positioned the company to continue generating free cash flow. In the third quarter, its free cash flow increased 233% to $2.7 billion, pushing cash and investments to $33.6 billion. Investors are placing bets that the company’s development of hardware and artificial intelligence software will result in an autonomous network of Tesla cars, giving it a new source of income akin to Uber.
While electric vehicle sales continue to drive free cash flow growth, Tesla, Inc. (NASDAQ:TSLA) is also well positioned to capitalize on generational growth opportunities in categories including self-driving vehicles, batteries, and robotics.
Overall, TSLA ranks 4th on our list of best blue chip stocks to buy for 2025. While we acknowledge the potential of TSLA as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued AI stock that is more promising than TSLA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
