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Sweetgreen's Salad Days: Why AI Stocks Offer Better Bites in 2025

Clyde MorganMonday, May 12, 2025 3:59 pm ET

17min read

The fast-casual dining sector has long been a magnet for growth investors, with Sweetgreen (SG) standing out as a poster child for health-conscious millennials. Backed by 33 hedge funds and reporting 16% revenue growth in 2024, SG’s Q4 results appeared promising—but dig deeper, and cracks emerge. Meanwhile, AI-driven infrastructure stocks are soaring, offering superior risk-adjusted returns. This article dissects why investors should pivot from SG’s “leafy greens” to the “green lights” of AI innovation.

Sweetgreen’s Q4 2024: A Mixed Salad Bowl of Results

Sweetgreen’s Q4 revenue rose 5.1% to $160.9 million, but this missed analyst expectations and triggered a 10.6% post-earnings stock drop. While full-year 2024 EBITDA turned positive ($18.7 million vs. a $2.8 million loss in 2023), the path to profitability remains bumpy. Labor costs still consume 29% of revenue, and same-store sales growth (4% in Q4) relied on price hikes rather than traffic gains. The Infinite Kitchen robotic system—SG’s “secret sauce”—delivers 7% lower labor costs, but only half of its 246 locations use it. With 60% of stores hit by extreme weather in early 2025, scalability challenges loom large.

Valuation: SG’s 2.86x EV/Sales vs. AI’s Sky-High Multiples

SG’s current EV/Sales ratio of 2.86x (vs. 2025 revenue of $676.8M) seems reasonable—until compared to AI peers. ServiceNow (NOW) trades at 15x EV/Sales, while Duolingo (DUOL) soars to 29.5x. Even struggling Tempus AI (TEM) commands a 25.8x median M&A multiple. SG’s lack of profitability (TTM net loss: $89.35M) leaves its P/E ratio undefined, whereas ServiceNow’s 143.65x P/E reflects investor faith in its AI-driven SaaS dominance.

The AI Opportunity: Where the Real Growth Lies

While SG’s 2025 revenue target ($760–780M) implies just 13% growth, AI stocks are on fire:- ServiceNow (NOW): Subscription revenue to hit $15B by 2025, up from $10.6B in 2023. Its AI platform Now Assist is projected to generate $1B in annual contract value by year-end.- Uber (UBER): Adjusted EBITDA to hit $10B by 2025 via autonomous vehicle partnerships, with free cash flow up 66% YoY to $2.25B.- Taiwan Semiconductor (TSM): AI chip revenue to double in 2025, fueled by demand from NVIDIA and cloud giants.

Cash Flow and Risk: SG’s Weak Spots vs. AI’s Strengths

SG’s Cash Flow: Negative $145.51M net cash (debt exceeds cash), with third-party delivery costs eroding margins.
AI’s Cash Machines: Amazon (AMZN) generated $24B net cash from operations in Q1 2025. Alphabet’s Google Cloud hit $49B annual run-rate sales, while NVIDIA’s data center revenue surged to $61B in 2024.

The Bottom Line: Trade SG’s Greens for AI’s Gold

Sweetgreen’s 2025 roadmap—expanding Infinite Kitchens and launching SG Rewards—may stabilize its trajectory. Yet its 2.86x EV/Sales and operational headwinds pale against AI’s 34–50% revenue growth rates and investor willingness to pay 25–30x revenue multiples for disruptive tech. With SG’s stock down 10% post-earnings and AI stocks like ServiceNow trading at record highs, the choice is clear: AI infrastructure stocks offer superior upside with better margin profiles and growth catalysts.

Investors chasing “healthy returns” should swap SG’s salad for a hefty serving of AI-driven stocks. The next 12 months will reward those who prioritize robotics, cloud AI platforms, and semiconductor innovation over incremental fast-casual growth. The fork is in your hand—choose wisely.

Action Now: Rotate out of SG’s 2.86x EV/Sales valuation and into AI leaders like NOW (15x) or SMCI (Super Micro, 16.07x P/E). The salad bowl is full—time to grab the golden spoon.

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