Investing

Super Micro Computer vs. NVIDIA: Which Is a Better Buy This Year

Joshua Rodriguez

Published: July 12, 2024 11:10 am

Key Points

• NVIDIA’s revenue and net income grew 262.12% and 628.39% year-over-year, respectively, outperforming Super Micro Computer’s 200.01% revenue and 368.82% net income growth.
• While Super Micro Computer offers a better PE ratio (45 vs. NVIDIA’s 72), NVIDIA has a lower debt-to-equity ratio (0.197 vs. 0.35) and pays a dividend, making it a stronger investment choice.
• Our brand-new “The Next NVIDIA” report dives deep into AI winners beyond just NVIDIA. Make sure to grab a complimentary copy if you’re interested in discovering more high-upside ideas in this massive trend.

If you’re looking for a microchip stock to invest in, you’ve likely come across NVIDIA (Nasdaq: NVDA) and Super Micro Computer (Nasdaq: SMCI) as options. After all, these are two leading stocks across the industry. 

For a bit of back story, NVIDIA was founded in April 1993. Since then, the company has grown to become one of the largest companies in the world with a more than $3 trillion market cap. The company is at the center of the artificial intelligence (AI) revolution, and experts suggest that we wouldn’t have modern AI if NVIDIA and the tech it develops didn’t exist. 

On the other side of the coin, we have Super Micro Computer. Founded in September 1993, the company has become a force to be reckoned with. Currently, Super Micro Computer boasts a market cap of more than $51 billion. And, while the company is smaller than NVIDIA, the opportunity its stock represents could be just as meaningful, if not more so. 

So, which of these stocks is the better one to invest in if you want semiconductor exposure in 2024? We’ve compared the two below. 

Comparing Super Micro Computer and NVIDIA

As mentioned above, both Super Micro Computer and NVIDIA are semiconductor companies that may be worth an investment. But, which is better? We’ve compared the two in terms of growth, value, and income to learn which makes the better investment. Here’s what we found: 

Comparing Growth Metrics

When it comes to stock price growth, NVIDIA and Super Micro Computer have made incredible runs for the top this year. NVIDIA is up nearly 160% year-to-date, while Super Micro Computer is up over 180% during the same period. 

But, stock price growth isn’t the only growth metric you should pay attention to. 

In its most recent quarterly earnings report, NVIDIA’s revenue was up 262.12% year-over-year, and its net income grew 628.39% in that period. While Super Micro Computer saw strong growth, its year-over-year performance wasn’t quite as impressive as NVIDIA’s. In its most recent earnings report, we learned that revenues and net income were up 200.01% and 368.82%, respectively. 

From a growth standpoint, Super Micro Computer’s stock has outperformed NVIDIA’s so far this year. However, with stronger revenue and net income growth, NVIDIA would be our pick for the strongest play between the two options. 

Comparing Income Metrics

Keep in mind that neither of these stocks is considered an income stock. Instead, they both fit best in the growth stock category. But, if you can generate income through your investments, it’s typically best to do so. 

With that said, NVIDIA is the clear winner in terms of income potential. That’s because Super Micro Computer doesn’t pay a dividend. As such, you won’t earn any income when you invest in the company. 

On the other hand, NVIDIA currently has a $0.01 quarterly dividend, representing a dividend yield of 0.032%. While that’s not very impressive when compared to leading income stocks, adding any income to a growth story is always welcomed as icing on the cake, and it makes for a compelling argument as to why NVIDIA may be the better play when compared to Super Micro Computer this year. 

Which Is the Better Buy for 2024?

All told, both NVIDIA and Super Micro Computer are impressive growth stocks that have earned their place as contenders in the semiconductor and supercomputing space. On the other hand, NVIDIA emerges as a clear winner when comparing the two. Ultimately, the company has seen more impressive revenue and net earnings growth. And, while these stocks are tied in terms of value, NVIDIA is the only one of the two that pays a dividend. You may want to add both of these stocks to your portfolio. But if you’re torn between the two, NVIDIA would likely be the better investment.