Nvidia (NASDAQ: NVDA) i SK Hynix (NASDAQ: SKHY) are two of the biggest names in the AI ​​chip market. The former specializes in high-performance accelerated data processing products, while the latter introduces American Depositary Receipts (ADRs) to the market. Nasdaq today (July 10) – produces memory chips.

Both stocks look budget-friendly right now, especially considering their growth levels. But which company do I consider a better long-term investment for my retirement portfolio?

The Nvidia case

While Nvidia has had an incredible run over the last decade, I think there’s still a lot to like about the stock. First, the company recently launched its next-generation GPU platform, Vera Rubin, and demand has been huge.

Second, the company remains a clear leader in accelerated computing with massive market share. Other companies, e.g AMD AND Broadcom are gaining some market share, but Nvidia remains at the forefront.

One of the reasons it continues to be a leader is its CUDA software platform. This provides a moat because there is a whole ecosystem of developers who employ this to code.

Third, the company is moving into other areas of chips and artificial intelligence. Examples include processors, humanoid robotics, and autonomous vehicles.

Fourth, the price-to-earnings ratio (P/E) is below 20, which means the company is attractively valued. Note that the average price target is $302 – approximately 50% higher than the current share price.

Another thing I like is that the company’s stock has recently taken a breather and consolidated gains. This year it is less than 10%. On the other hand, the risk is a slowdown in AI investment spending and competition from rivals. Overall, though, there’s a lot to like.

History of SK Hynix

As for SK Hynix, it also has a lot to offer. At the moment, the demand for memory is high and as a result, the company’s revenues are increasing rapidly.

It is worth noting that SK Hynix is ​​the dominant player in the high-bandwidth memory (HBM) market with almost 60% market share. This memory is needed for generative AI, and tech companies are willing to pay a premium for it.

Another thing I like is that the company has a very close relationship with Nvidia. In recent years, it has been a major supplier of memory for Nvidia GPUs, and today it works closely with the company to develop next-generation memory chips.

In terms of valuation, it is lower than Nvidia’s – the forward-looking P/E ratio is only around five. However, analysts see more or less the same medium-term potential in this regard.

While all this is very positive, the risk is the cyclical nature of the memory market. This market has experienced major downturns in the past, and we may see this again in the coming years if demand declines or supply catches up with demand.

Another issue is this SAMSUNG AND Micron they are aggressively trying to gain market share in HBM and are succeeding.

And finally, the fact that the company’s shares have increased by over 600% over the last year. This definitely increases the risk.

My choice

When weighing risk against reward, my money is with Nvidia right now. I consider it a better choice for my portfolio. Maybe one day I will consider buying SK Hynix. But for now, I see greater appeal in Nvidia.

Is it worth investing £5,000 in Nvidia now?

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Edward Sheldon owns shares in Nvidia, Broadcom and Micron