Carbon nanotubes (CNTs) show exceptional properties that render them attractive for incorporation in a new generation of high‐performance engineering composites with tailored properties. While a great deal of work has been done toward using CNTs as a reinforcing agent in polymer composites, the full potential of CNTs has yet to be reached. In this work, two case studies were proposed in order to analyze the effectiveness of CNTs and carbon fibers (CFs) as reinforcing agents. Micromechanics models for the stiffness and strength of hybrid composites, comprising CNTs and CFs are derived by considering the concept of effective fiber. In addition, the 2009 prices of commercially available CNTs are reviewed. The strongest, the stiffest, and the cheapest CFs commercially available are compared with single walled CNTs (SWCNTs) and multiwalled CNTs (MWCNTs). The simulated results from the micromechanics models show that the use of CFs makes the acquisition of composites with maximum tensile strengths of 4.18 GPa possible. Analysis of the cost versus property relation showed that CNTs are the most viable strengthening option for achieving composites with strengths of up to 11.61 GPa. It is also shown that CFs are the most viable stiffening option, making composites with Young's moduli of up to 383 GPa possible at the expense of the material's toughness. Moreover, it is shown that, in order to achieve CNT's true potential, several challenges have to be faced. CNTs have to be produced with higher purity, longer lengths, better integrity, in larger amounts, and at lower cost. Moreover, issues such as orientation of the CNTs, their concentration, interfacial adhesion, distribution, and dispersion have to be overcome.