NVIDIA (NVDA) and Inphi (IPHI) Critical Analysis

NVIDIA (NASDAQ:NVDA) and Inphi (NYSE:IPHI) are both computer and technology companies, but which is the better investment? We will compare the two businesses based on the strength of their dividends, valuation, profitability, earnings, risk, institutional ownership and analyst recommendations.

Analyst Recommendations

This is a breakdown of current ratings and price targets for NVIDIA and Inphi, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
NVIDIA 0 8 26 0 2.76
Inphi 2 4 7 0 2.38

NVIDIA presently has a consensus price target of $293.84, suggesting a potential upside of 20.89%. Inphi has a consensus price target of $38.35, suggesting a potential upside of 12.82%. Given NVIDIA’s stronger consensus rating and higher possible upside, research analysts clearly believe NVIDIA is more favorable than Inphi.

Dividends

NVIDIA pays an annual dividend of $0.60 per share and has a dividend yield of 0.2%. Inphi does not pay a dividend. NVIDIA pays out 12.8% of its earnings in the form of a dividend. NVIDIA has raised its dividend for 5 consecutive years.

Valuation and Earnings

This table compares NVIDIA and Inphi’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
NVIDIA $9.71 billion 15.21 $3.05 billion $4.67 52.05
Inphi $348.20 million 4.28 -$74.90 million $0.58 58.60

NVIDIA has higher revenue and earnings than Inphi. NVIDIA is trading at a lower price-to-earnings ratio than Inphi, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares NVIDIA and Inphi’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
NVIDIA 36.21% 54.18% 36.19%
Inphi -33.36% -3.51% -1.54%

Volatility and Risk

NVIDIA has a beta of 1.64, suggesting that its stock price is 64% more volatile than the S&P 500. Comparatively, Inphi has a beta of 1.14, suggesting that its stock price is 14% more volatile than the S&P 500.

Institutional and Insider Ownership

65.7% of NVIDIA shares are held by institutional investors. 4.7% of NVIDIA shares are held by insiders. Comparatively, 3.4% of Inphi shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Summary

NVIDIA beats Inphi on 15 of the 17 factors compared between the two stocks.

NVIDIA Company Profile

NVIDIA Corporation operates as a visual computing company worldwide. It operates through two segments, GPU and Tegra Processor. The GPU segment offers processors, which include GeForce for PC gaming and mainstream PCs; GeForce NOW for cloud-based game-streaming service; Quadro for design professionals working in computer-aided design, video editing, special effects, and other creative applications; Tesla for AI utilizing deep learning, accelerated computing, and general purpose computing; GRID provides power of NVIDIA graphics through the cloud and datacenters; DGX for AI scientists, researchers, and developers; and cryptocurrency-specific graphics processing units. The Tegra Processor segment provides processors designed to enable branded platforms – DRIVE and SHIELD; DRIVE automotive computers and software stacks, which offer self-driving capabilities; SHIELD devices and services designed for mobile-cloud in home entertainment, AI, and gaming applications; and Jetson TX 2, an AI computing platform for embedded use. The company's products are used in gaming, professional visualization, datacenter, and automotive markets. NVIDIA Corporation sells its products to original equipment manufacturers, original device manufacturers, system builders, add-in board manufacturers, retailers/distributors, Internet and cloud service providers, automotive manufacturers and tier-1 automotive suppliers, mapping companies, start-ups, and other ecosystem participants. NVIDIA Corporation was founded in 1993 and is headquartered in Santa Clara, California.

Inphi Company Profile

Inphi Corp. engages in the provision of analog and mixed signal semiconductor solutions for the communications and computing markets. It offers analog and mixed signal semiconductor solutions; and semiconductor solutions. Analog and mixed signal semiconductor solutions offers high signal integrity at data speeds while reducing system power consumption. Semiconductor solutions comprises of solutions that address bandwidth bottlenecks in networks; maximize throughput and minimize latency in computing environments; and enable the rollout of next generation communications, datacenter, and computing infrastructures. The company was founded by Loi Nguyen, Gopal Raghavan, Timothy D. Semones, and Ashok Dhawan in November 2000 and is headquartered in Santa Clara, CA.

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