Has Micron Technology Become the New Nvidia?

In recent years, Nvidia (NASDAQ: NVDA) has been the hot growth stock that the market has been rallying around, determining the overall path forward. And as it has done well, so too has the S&P 500. The stock has been a lightning rod for growth investors, attracting plenty of investment dollars.

More recently, however, another big name in tech has been rising prominently, and that's Micron Technology (NASDAQ: MU). Not only has it been generating Nvidia-like returns of late, but there was also plenty of anticipation around its recent earnings results, as investors looked to the numbers to see whether the stock's impressive rally could continue. Is this a sign that Micron has become the new Nvidia, and that it's the new go-to investment for growth investors?

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Micron has been the better buy in the past five years

You might be surprised to learn that over the past five years, Micron has actually outperformed Nvidia. Its gains over that stretch are up around 1,300%, while Nvidia, which has been slowing down of late, is up by 860%. For a while, however, the gap was significant, with Nvidia's gains far exceeding Micron's. It wasn't until the rapid surge this year, with Micron's stock rising almost in a straight line up, that its gains soared past Nvidia's.

There is clearly more hype around Micron these days, not unlike the hype that was around Nvidia a few years ago, when ChatGPT and generative artificial intelligence were in their early stages. Now, with investors focused on memory products and the shortages in that industry, it's Micron that appears to be in the spotlight.

Why Nvidia may still be the safer option for investors

Although Micron has been delivering impressive results in recent quarters due to strong demand for its memory and storage products, that growth isn't likely to be sustainable over the long haul. Micron's revenue rose by 346% in its most recent quarter (which ended on May 28) to $41.5 billion. It was an impressive result, but it was largely due to significantly higher prices for its products; its margins were around 85% versus 38% a year ago.

Nvidia's growth rate has slowed from the highs it hit in previous years, but it remains strong at 85%, and it isn't dependent on rapidly rising prices. That's why, from a risk standpoint, it may be a more compelling option, because if there's any hint of demand slowing down or if there's no longer a shortage of memory and storage products, Micron's stock could be due for a steep decline, especially given its rapid run-up in value over the past year.

David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Micron Technology and Nvidia. The Motley Fool has a disclosure policy.