Nvidia vs. Micron: The AI Revolution Is Big Enough for Both. Here's the Better Buy.

Nvidia (NASDAQ: NVDA) and Micron (NASDAQ: MU) each have been playing key roles in the artificial intelligence (AI) revolution. Nvidia is the maker of the logic chip that powers the "thinking" of AI models, while Micron makes the memory and storage solutions that are also essential in the training and use of AI.

Investors have recognized the importance of these companies and their products and have piled into their shares. Nvidia's gains started earlier than those of Micron, back in 2023, and have accelerated over the past two years. Micron climbed somewhat back then but truly took off this year. Over the past five years, Nvidia has advanced more than 800%, while Micron has soared 1,200%.

The AI revolution is big enough for both of these market titans -- but which is the better buy? Let's find out.

Image source: Getty Images.

The case for Nvidia

Nvidia dominates the AI chip market, selling the graphics processing units (GPUs) that power unavoidable tasks such as the training and inference of models. The company isn't alone in the market, but it is the leader thanks to its early entry, the speed of its GPUs, and its commitment to innovation to remain ahead of rivals.

All of this has translated into eye-popping earnings growth over the past few years. Nvidia's revenue and profit have marched higher, climbing in the double and triple digits to record levels. In the latest period, for example, revenue soared 106% to $96 billion, while net income jumped 126% to $59 billion.

Though Nvidia is best known for its GPUs, the company's work doesn't stop here. It has created complete systems, including networking tools and enterprise software, and developed platforms to serve specific industries like healthcare and robotics. The tech giant has also been growing its presence through acquisitions as we can see through its plan to buy open-source AI platform Hugging Face.

As the AI focus transitions from the training of models to widespread use of AI in the real world, Nvidia is well positioned to benefit and continue delivering solid revenue gains.

The case for Micron

Micron has served the AI market in its early days, for the training of models, but the greater revenue opportunity is happening now and may continue well into the future. As mentioned, the company makes the memory and storage needed for various AI tasks.

And the current and future major revenue opportunity lies in the area of agentic AI. This involves AI taking on a problem and going through various steps to solve it. And for this, memory is needed on an ongoing basis, representing significant and lasting growth for Micron. This is why, with the market moving toward agentic AI, Micron's earnings and stock price have surged.

In the latest quarter, the company reported a revenue increase of more than 370%, and with memory supply tight, Micron has developed strategic customer agreements or multi-year supply contracts. This move secures supply for customers into the future and offers Micron and its shareholders greater visibility into revenue to come. So these agreements are positive for all involved.

Considering we're in the early stages of the use of AI in the real world, Micron's revenue could continue to march higher in the quarters to come.

Which stock is the better buy?

Nvidia and Micron are both important players in the AI revolution. And today, each of these stocks looks reasonably priced.

NVDA PE Ratio (Forward) data by YCharts

But the better buy today is Nvidia. Here's why. Micron should continue to generate growth, but it is more vulnerable to a potential decline in prices once memory supply normalizes over the next couple of years. And this could weigh on growth. The memory market is cyclical, shifting from periods of tight supply to oversupply -- and an eventual time of high supply is likely to slow or halt Micron's momentum.

Nvidia, due to its broad presence across the AI industry and range of products and services, might better navigate potential headwinds -- and feel less pressure on earnings and stock performance. The company's market isn't cyclical, which means greater stability in revenue over time. All of this means Nvidia is the best stock to add to your AI portfolio right now.

Adria Cimino 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.