ARM (NASDAQ:ARM – Get Free Report) and NVIDIA (NASDAQ:NVDA – Get Free Report) are both large-cap technology companies, but which is the superior investment? We will compare the two companies based on the strength of their earnings, dividends, valuation, analyst recommendations, institutional ownership, risk and profitability.
Insider and Institutional Ownership
7.5% of ARM shares are held by institutional investors. Comparatively, 65.3% of NVIDIA shares are held by institutional investors. 3.9% of NVIDIA shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.
Earnings and Valuation
This table compares ARM and NVIDIA”s revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| ARM | $4.92 billion | 70.87 | $904.00 million | $0.97 | 336.57 |
| NVIDIA | $215.94 billion | 25.49 | $120.07 billion | $7.91 | 28.88 |
NVIDIA has higher revenue and earnings than ARM. NVIDIA is trading at a lower price-to-earnings ratio than ARM, indicating that it is currently the more affordable of the two stocks.
Analyst Recommendations
This is a breakdown of current recommendations for ARM and NVIDIA, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| ARM | 1 | 7 | 18 | 1 | 2.70 |
| NVIDIA | 0 | 2 | 50 | 3 | 3.02 |
ARM currently has a consensus price target of $305.72, suggesting a potential downside of 6.36%. NVIDIA has a consensus price target of $324.34, suggesting a potential upside of 42.00%. Given NVIDIA’s stronger consensus rating and higher possible upside, analysts clearly believe NVIDIA is more favorable than ARM.
Profitability
This table compares ARM and NVIDIA’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| ARM | 20.25% | 12.24% | 9.41% |
| NVIDIA | 63.66% | 96.04% | 71.00% |
Risk and Volatility
ARM has a beta of 3.89, indicating that its share price is 289% more volatile than the S&P 500. Comparatively, NVIDIA has a beta of 2.22, indicating that its share price is 122% more volatile than the S&P 500.
Summary
NVIDIA beats ARM on 12 of the 15 factors compared between the two stocks.
About ARM
Arm Holdings Plc engages in the licensing, marketing, research, and development of microprocessors, systems IP, graphics processing units, physical IP and associated systems IP, software, and tools. It operates through the following geographical segments: United Kingdom, United States, and Other Countries. The company was founded on November 12, 1990 and is headquartered in Cambridge, the United Kingdom.
About NVIDIA
NVIDIA Corporation provides graphics and compute and networking solutions in the United States, Taiwan, China, Hong Kong, and internationally. The Graphics segment offers GeForce GPUs for gaming and PCs, the GeForce NOW game streaming service and related infrastructure, and solutions for gaming platforms; Quadro/NVIDIA RTX GPUs for enterprise workstation graphics; virtual GPU or vGPU software for cloud-based visual and virtual computing; automotive platforms for infotainment systems; and Omniverse software for building and operating metaverse and 3D internet applications. The Compute & Networking segment comprises Data Center computing platforms and end-to-end networking platforms, including Quantum for InfiniBand and Spectrum for Ethernet; NVIDIA DRIVE automated-driving platform and automotive development agreements; Jetson robotics and other embedded platforms; NVIDIA AI Enterprise and other software; and DGX Cloud software and services. The company's products are used in gaming, professional visualization, data center, and automotive markets. It sells its products to original equipment manufacturers, original device manufacturers, system integrators and distributors, independent software vendors, cloud service providers, consumer internet companies, add-in board manufacturers, distributors, automotive manufacturers and tier-1 automotive suppliers, and other ecosystem participants. NVIDIA Corporation was incorporated in 1993 and is headquartered in Santa Clara, California.
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