Should You Buy Micron Stock Instead of Nvidia Stock? | MU Stock vs. NVDA Stock

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엔비디아와 마이크론을 매출·영업이익률·ROIC·밸류에이션으로 비교. 두 종목 모두 매수 의견이나 경쟁우위와 지속성 면에서 엔비디아를 선호. 마이크론은 단기 가격 상승으로 이익률이 높으나 지속성은 낮다고 봄. 엔비디아 포트폴리오 보유, 마이크론은 편입 검토 중.

다듬은 글

※ 자동 자막 원문(다듬기 전)

01. Investors ask me which stock I like better: Nvidia or Micron, and I thought this would be a great comparison. ev to find out about the 10 best deals to buy. So, when I compare two companies for investment, I like to start with revenue. Looking at the revenue over the previous decade over the past 12 months, you can see that business is booming for both of these companies.

02. Nvidia's revenue has grown to $253 billion in from less than $5 billion in 2017. You can see in this graph that Micron's revenue used to exceed Nvidia's revenue, but now Nvidia is significantly ahead of Micron. Micron is also not lagging behind. Its revenue was $90.3 billion over the past 12 months.

03. And in the last completed quarter, revenue quadrupled year-over-year , increasing by more than $40 billion compared to $9 billion in the same period last year. Looking to the future, both companies are in high demand. Shortages in memory and storage supplies have led to explosive price increases for Micron components .

04. The company reports triple-digit, and in some cases 200-300% year-on-year price increases for the products it sells . Meanwhile, sales growth is less than 20% year-on-year . Nvidia's growth is based on a more sustainable source. Nvidia sells more units and innovates every year, and these two factors together drive up prices, meaning I should have said revenue and technology valuation.

05. Nvidia has a stronger competitive advantage compared to Micron. Micron isn't even a leader in cutting-edge data center technology— high- bandwidth memory. So, evaluating this, we can say that Nvidia, combined with its software, creates more differentiation for its customers than Micron. The next metric I wanted to compare them on was operating profit margin, where they showed very similar results.

06. Nvidia's operating profit margin was 64 % for the most recent period, while Micron's was 65.75%. Both companies have shown significant improvements in operating profitability, with Micron's operating profit margin exceeding 80% in the most recently completed quarter . As for Micron, I don't think its operating profit margin is as sustainable as Nvidia's.

07. However, in the near term, over the next four to six quarters, I expect Micron's operating profit margin to continue to exceed Nvidia's. Now it all depends on pricing. And higher average selling prices for Micron components are likely to persist for at least the next four quarters. The next indicator by which I wanted to compare these companies is the return on invested capital.

08. It takes into account how much capital you invest in the business to generate profit. Micron is known as a capital-intensive business. It not only develops semiconductor designs, including memory and storage devices, which it sells to customers, but also manufactures them itself. They own and operate several manufacturing facilities in the US and abroad.

09. Meanwhile, Nvidia is using a well-known minimal- asset approach. It develops semiconductors that it sells to its customers, but does not manufacture them. It outsources production to Taiwan Semiconductor Manufacturing Company. Therefore, when directly comparing profits, it should be taken into account that Nvidia spends significantly less capital than Micron to generate revenue that is three times higher than Micron's revenue.

10. Not surprisingly, its return on invested capital is almost twice as high as Micron's: 112% versus 63%. Both companies have shown significant improvement in this metric over the past decade and are showing phenomenal results that I believe are unsustainable. As for Nvidia, I suspect its return on invested capital will decline, and even if it stabilizes at 40%, that could be a solid rate of return for investors in the long term.

11. Similarly, for Micron, I don't expect profitability to remain above 60 % for an extended period, but I believe it could exceed 80% over the next four quarters. In the long term, the average return on invested capital for Micron could be 30 to 40%, and for Nvidia, 40 to 60%. Now that we have compared performance in terms of revenue, profitability, and return on invested capital, let's look at the valuation of value.

12. On a forward price-to- earnings basis, Nvidia shares are worth almost three times as much as Micron shares. Nvidia's forward price-to-earnings ratio is 15.3, while Micron's is 5.3. It's worth noting that these estimates look relatively low for both Nvidia and Micron. And it's no wonder that both of these companies have a " buy" rating from me.

13. I also like to estimate value by calculating discounted cash flow. For Nvidia, I calculated a fair value of $35 per share compared to its current market price of $197. Nvidia shares look undervalued on both the forward P/E ratio and the discounted cash flow method. Similarly, I calculated the fair value of Micron and it was $1,487.

14. Compared to the current market price of $820, it looks undervalued, regardless of whether I use the discounted cash flow method or the forward price-to- earnings ratio. So, as I mentioned, both companies look attractive. I have given both stocks a "buy" rating. However, if I had to choose just one of these two stocks in the semiconductor or artificial intelligence sector, I would choose Nvidia.

15. The deciding factor for me is the competitive advantage that Nvidia has compared to Micron's. I believe that Nvidia's revenue, profit, and margin stability is more durable than Micron's, which is dependent on supply and demand imbalances in the short term. Therefore, I prefer buying Nvidia, although I think both companies are excellent investment opportunities right now.

16. Which one would you choose? Would you prefer Nvidia or Micron? Let me know in the comments below, because I'm following them closely. These two companies are among the most popular in the artificial intelligence market, and both face serious obstacles in the near term as AI stocks come under pressure.

17. In fact, not only did I rate Nvidia stock as a " buy," I also included Nvidia in my list of the 12 best stocks to buy right now. And I have Nvidia shares in my own portfolio. Meanwhile, I also rate Micron shares as a "buy," but I don't include them in my top 12 buys. And I don't have Micron shares in my portfolio yet. Although I am interested in adding these shares.