Nvidia’s (NVDA) data-center, GPU expertise makes it a better bet than Micron

Shares of Nvidia Corporation (NASDAQ: NVDA) climbed to an all-time high earlier this month, after the chipmaker reported robust fourth-quarter results, and maintained the uptrend. The significance of the report is that it came after several quarters of slowdown. Meanwhile, the stock pulled back last week when most technology stocks witnessed sell-off amid concerns of coronavirus outbreak.

Also see: Nvidia Q4 2020 Earnings Conference Call Transcript

Past performance indicates that Nvidia usually regains strength very quickly whenever it loses market value. So, the latest dip can be viewed as an opportunity for investors to add the stock to their portfolio – something analysts are overwhelmingly recommending. Nvidia has an impressive dividend history and is good at returning value to shareholders.

Among peers, Micron Technology (MU) lost about 3% in the last session, extending the downtrend that started a week ago after hitting a peak. Micron is all set to publish second-quarter earnings on March 25, after reporting dismal first-quarter results a couple of months ago. There was broad-based slump across all the business units that resulted in double-digit contraction in earnings and revenues.

Memory Market Woes

However, the market responded positively to the weak numbers, which had exceeded estimates. The near-term outlook on Micron is not very optimistic due to the continuing slowdown in the demand for memory chips. Given the cyclical nature of the industry, the company is poised to rebound in 2020, but some experts believe it would happen only towards the end of the year.

While the consensus rating on Micron is buy, the stock seems to be ideal for those who are ready to wait and watch. Its shareholders will be looking for convincing updates from the management about a potential turnaround.

Outlook

For Nvidia, 2020 is going to be a fruitful year as it continues to ride on the strength of data center and graphic products. The expertise in GPU products, especially the ray-tracing technology, has helped it expand market share, often giving tough competition to others like Advanced Micro Devices (AMD).

Related: Micron’s stock gains on optimistic business outlook

Going forward, Nvidia looks to thrive on the rapid expansion of the gaming industry and the growing trend of artificial-intelligence applications being deployed in the cloud. Market watchers, in general, are quite bullish about the stock and believe it is still cheap.

Back on Track

Nvidia owes its impressive fourth-quarter numbers to its thriving core business, with revenue growth accelerating on the back of stable demand. Consequently, earnings more than doubled to $1.89 per share and surpassed expectations.

Nvidia shares increased 24% so far this year and 15% in the past twelve months. Micron gained 37% since last year, after going through several ups and downs. On Monday morning, it traded below $55 after closing the previous session sharply lower.

Listen to publicly listed companies’ earnings conference calls along with the edited closed caption text