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Better Buy: Micron (MU) vs. Nvidia (NVDA) Stock

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Shares of Micron (MU - Free Report) and Nvidia (NVDA - Free Report) both opened higher on Wednesday, with Micron touching a new 52-week high and Nvidia inching closer to its all-time mark. Both of these semiconductor powers are also currently Zacks Rank #1 (Strong Buy) stocks, so let’s take a quick look at some of their current fundamentals to see if either stock has an advantage at the moment. 

Stock Movement

Nvidia stock has skyrocketed 1,021% over the last three years, while Micron stock has soared 125%. Narrowing the focus a bit more, the two stocks are much more neck and neck. Shares of Nvidia are up 437% during the last two years, outpacing Micron’s nearly 404% surge. Nvidia and Micron both crushed the S&P 500’s 28% climb and also made fellow growth giant Amazon’s (AMZN - Free Report) 123% move look small.

Within the last year, the picture shifts much more heavily in Micron’s favor. Shares of Micron have soared 108% over the last year, while Nvidia has surged nearly 74%.

 

Investors will see that Micron stock has performed insanely well since the start of the year. Shares of Nvidia have also greatly outperformed the market and investors might like to see that its stock is not currently sitting at a new 52-week high, meaning there is some room to move before the added burden of climbing into a new range.

Valuation

Now that we have reviewed the two chip stocks recent movement, let’s move onto their current valuation picture. This is where investors will see a massive difference but must try to evaluate the stocks against each other as well as their own historical standing.

Coming into Wednesday, Micron stock was trading at 5.9X forward 12-month Zacks Consensus EPS estimates, which marks a significant discount compared to its industry’s 13.2X. This industry includes the likes of Intel (INTC - Free Report) , Advanced Micro Devices (AMD - Free Report) , and Texas Instruments (TXN - Free Report) . Over the last year, Micron stock has traded as high as 6.9X, as low as 4.1X, and rocks a one-year median of 5.5X.

Clearly, investors will notice that Nvidia stock is trading at a massive premium to Micron, at 34.8X forward 12-month earnings estimates. Nvidia also rests far above the industry’s average of 18.3X and the S&P 500’s 16.6X. With that said, Nvidia stock has traded as high as 57.4X, with a one-year median of 45.5X, and is currently trading just above its year-long low.

Therefore, investors should be able to say with confidence that Nvidia stock is not expensive at the moment. Stepping out a bit further, it is not too much of a stretch to say that Nvidia stock appears attractive at this current valuation. And of course, Micron stock looks like one of the stronger value plays on the market, especially considering its growth projections.

Outlook

Our current Zacks Consensus Estimates are calling for Micron’s quarterly revenues to hit $7.7 billion, which would mark over a 38% climb from the year-ago period. Looking a bit further ahead, the company’s full-year revenues are projected to soar nearly 46% to reach $29.62 billion.

Micron’s quarterly earnings are projected to skyrocket roughly 94% to touch $3.14 per share. Meanwhile, the company’s full-year earnings are expected to soar over 132% to reach $11.53 per share.

Transitioning to Nvidia, the company is projected to report quarterly revenues of $3.11 billion, representing a 39% climb. For the full-year, Nvidia’s revenues are expected to surge nearly 36% to touch $13.18 billion. The company’s adjusted earnings are expected to expand by 81% this quarter and 61% this year.

Bottom Line

Both Nvidia and Micron are currently Zacks Rank #1 (Strong Buy) stocks and sport “A” grades for Growth in our Style Scores system. Investors will also be pleased to note that NVDA and MU have received a ton of earnings estimate revisions within the last 30 days for both the current quarter and full-year, with 100% agreement to the upside.

Clearly, it is hard to go wrong with either stock at the moment as both are projected to experience massive top and bottom line growth this year. The companies also operate in a growth industry and have set their sights on new areas just starting to boom, from AI to self-driving vehicle technology. Still, at the moment, the advantage has to go to Micron because of its outstanding value.

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