SpaceX's Valuation Sparks Debate as Alphabet Reigns Supreme

Alphabet and SpaceX are two tech giants that have significant investments in artificial intelligence (AI). While Alphabet is often considered an AI stock, SpaceX's AI division has been growing rapidly. In fact, xAI, a company acquired by SpaceX, generated $2.56 billion in revenue during the second quarter of this year, a 213% increase from last year.

Alphabet also develops several large language models to compete with xAI's, but these are accounted for within its other divisions. Google Cloud, Alphabet's cloud computing business, has been thriving as AI firms increasingly rely on renting computing power rather than building it themselves.

Google Cloud generated $24.8 billion in revenue during Q2, an 82% year-over-year increase. By comparison, SpaceX's total revenue for the same period was $7.8 billion. This makes Google Cloud a more significant business, with SpaceX posting a loss of $143 million from operations.

SpaceX is currently valued at around 41 times sales, making it an expensive stock. Alphabet, on the other hand, has historically traded below 10 times sales and has never reached more than 25 times sales. This suggests that SpaceX's valuation may be too high, making Alphabet a better AI stock to consider.