I am developing a web application in which users can upload excel files. I know I can use the OPENROWSET function to read data from excel into a SQL Server but I am refraining from doing so because this function requires a file path.
It seems kind of indirect as I am uploading a file to a directory and then telling SQL Server go look in that directory for the file instead of just giving SQL Server the file.
The other option would be to read the Excel file into a pandas dataframe and then use the to_sql function but pandas read_excel function is quite slow and the other method I am sure would be faster.
Which of these two methods is "correct" when handling file uploads from a web application?
If the first method is not frowned upon or "incorrect", then I am almost certain it is faster and will use that. I just want an experienced developers thoughts or opinions. The webapp's backend is Python and flask.
If I am understanding your question correctly, you are trying to load the contents of an xls(s) file into a SQLServer database. This is actually not trivial to do, as depending on what is in the Excel file you might want to have one table, or more probably multiple tables based on the data. So I would step back for a bit and ask three questions:

What is the data I need to save and how should that data be structured in my SQL tables. Forget about excel at this point -- maybe just examine the first row of data and see how you need to save it.
How do I get the file into my web application? For example, when the user uploads a file you would want to use a POST form and send the file data to your server and your server to save that file (for example, either on S3, or in a /tmp folder, or into memory for temporary processing).
Now that you know what your input is (the xls(x) file and its location) and how you need to save your data (the sql schema), now it's time to decide what the best tool for the job is. Pandas is probably not going to be a good tool, unless you literally just want to load the file and dump it as-is with minimal (if any) changes to a single table. At this point I would suggest using something like xlrd if only xls files, or openpyxl for xls and xlsx files. This way you can shape your data any way you want. For example, if the user enters in malformed dates; empty cells (should they default to something?); mismatched types, etc.

In other words, the task you're describing is not trivial at all. It will take quite a bit of planning and designing, and then quite a good deal of python code once you have your design decided. Feel free to ask more questions here for more specific questions if you need to (for example, how to capture the POST data in a file update or whatever you need help with).
What is the correct way to upload files to a SQL Server inside my web application?