Space Exploration Technologies (SPCX) recently completed the largest initial public offering (IPO) in history, helping Elon Musk become the world’s first trillionaire. However, this does not mean that investors should rush to buy the stock. As of Tuesday morning, this still-unprofitable company had a price-to-sales ratio of approximately 130 times, carrying a considerably high valuation premium.
Fortunately, there are many other growth stocks in the market that offer more reasonable valuations and attractive growth prospects. For example, the following two large technology companies are currently better investment choices than SpaceX.
Nvidia (NVDA) is no secret as an investment. It is the world’s most valuable company, and its artificial intelligence (AI) chips power the entire AI industry’s booming development. The company’s graphics processing units (GPUs) are the core of the technology underpinning the entire AI sector. Despite accounting for the vast majority of sales in the AI accelerator market for years, this tech giant with a market capitalization exceeding $5 trillion still maintains the growth rates typically associated with small- or mid-cap growth stocks.
In the first quarter of fiscal year 2027, ending April 27, Nvidia’s revenue surged 85% year-over-year, with a net profit margin exceeding 70%. The technology sector’s push toward agentic AI is expected to require more cloud computing power, laying the groundwork for Nvidia’s further growth. Management’s guidance for the second quarter of fiscal year 2027 indicates an expected sequential growth of 11.5%.
While competitors such as Broadcom and Advanced Micro Devices are also growing, none are growing as fast as Nvidia. Nvidia stands unique in the industry, and with a price-to-earnings ratio of 31.4 times, it offers a much higher margin of safety compared to SpaceX.
Alphabet (GOOG, GOOGL), with a market capitalization exceeding $4 trillion, is the world’s second-most-valuable company. The company currently has multiple catalysts driving considerable growth in both revenue and net profit, and has established several smaller business units with high potential.
Its price-to-earnings ratio of 27.3 times is reasonable for a company that posted 22% year-over-year revenue growth in the first quarter. Google advertising still accounts for the majority of its total revenue, but Google Cloud’s 63% year-over-year sales growth is equally notable. As enterprise customers increase their spending on AI, Google Cloud, as the world’s third-largest cloud infrastructure service provider, should continue to benefit. Moreover, Google Cloud’s growth rate is much higher than that of its larger competitors, Amazon Web Services (AWS) and Microsoft Azure.
Alphabet is also gaining market share in the large language model space through its Gemini AI model, and making progress in the autonomous driving sector with its Waymo self-driving car unit. These businesses currently do not have a significant impact on Alphabet’s overall financial results, but their revenue could grow rapidly and they are expected to become more important business segments.
All this growth is also accompanied by rising profits. Alphabet’s first-quarter operating profit grew 30% year-over-year, with an operating margin of 36.1%. Net profit increased substantially, partly benefiting from unrealized gains on some of its equity investments. While these additional profits are welcome, the sustained growth in operating profit indicates that its core business is still accelerating. This combination suggests that Alphabet has the potential to continue advancing toward a $5 trillion market capitalization.
In summary, while SpaceX’s IPO has attracted significant attention, its lofty valuation and lack of profitability make its investment appeal questionable. In contrast, Nvidia and Alphabet, as large-cap technology companies, not only have more reasonable valuations but also demonstrate strong revenue and profit growth momentum, with clear growth drivers in key areas such as AI and cloud computing. For investors seeking growth-oriented opportunities, these two stocks may offer better allocation value at current price levels than SpaceX.
