Compare Applied Materials, Inc. (AMAT) vs NVIDIA Corporation (NVDA) Stock

NVIDIA Corporation (NVDA) offers the better valuation at 36.2x trailing P/E (21.9x forward), making it the more compelling value choice. Analysts rate Applied Materials, Inc. (AMAT) a "Buy" — based on 53 analyst ratings — the highest consensus in this comparison. The "better buy" depends entirely on your goals: growth investors should weight revenue trajectory, value investors should weight P/E and PEG, and income investors should weight dividend yield and streak.

On trailing P/E, NVIDIA Corporation (NVDA) is the cheapest at 36.2x versus Applied Materials, Inc. at 43.0x. On forward P/E, NVIDIA Corporation is actually cheaper at 21.9x. The PEG ratio (P/E divided by earnings growth rate) is the most growth-adjusted single valuation metric: NVIDIA Corporation wins at 0.23x versus Applied Materials, Inc.'s 1.97x — a PEG below 1.0 traditionally signals the market is underpricing earnings growth.

Over the past 5 years, NVIDIA Corporation (NVDA) delivered a total return of +1181%, compared to +210.0% for Applied Materials, Inc. (AMAT). A $10,000 investment in NVDA five years ago would be worth approximately $128K today (assuming dividends reinvested). Over 10 years, the gap is even starker: NVDA returned +225.3% versus AMAT's +1926%. Past returns do not guarantee future results, and the stock with the higher historical return may already have its best growth priced in.

By beta (market sensitivity over 5 years), Applied Materials, Inc. (AMAT) is the lower-risk stock at 1.66β versus NVIDIA Corporation's 1.73β — meaning NVDA is approximately 4% more volatile than AMAT relative to the S&P 500. On balance sheet safety, NVIDIA Corporation (NVDA) carries a lower debt/equity ratio of 7% versus 32% for Applied Materials, Inc. — giving it more financial flexibility in a downturn.

NVIDIA Corporation (NVDA) is the more profitable company, earning 55.6% net margin versus 24.7% for Applied Materials, Inc. — meaning it keeps 55.6% of every revenue dollar as bottom-line profit. Operating margin tells a similar story: NVDA leads at 60.4% versus 29.2% for AMAT. At the gross margin level — before operating expenses — NVDA leads at 71.1%, reflecting greater pricing power or product mix advantage. Stronger margins indicate durable pricing power, lower cost of revenue, or higher mix of software/services. They are one of the clearest signs of business quality.

The PEG ratio (forward P/E divided by expected earnings growth rate) is the most precise measure of undervaluation relative to growth potential. By this metric, NVIDIA Corporation (NVDA) is the more undervalued stock at a PEG of 0.23x versus Applied Materials, Inc.'s 1.97x. A PEG below 1.0 is traditionally considered the threshold for growth-adjusted undervaluation. On forward earnings alone, NVIDIA Corporation (NVDA) trades at 21.9x forward P/E versus 33.9x for Applied Materials, Inc. — 12.0x cheaper on a one-year earnings basis. Analyst consensus price targets imply the most upside for NVDA: 52.9% to $271.00.

In this comparison, AMAT (0.5% yield) pays a dividend. NVDA does not pay a meaningful dividend and should not be held primarily for income.

For long-horizon retirement investors, Applied Materials, Inc. (AMAT) is the stronger choice — it scores higher on the combination of lower volatility, dividend reliability, and long-term compounding (+1926% 10Y return). NVIDIA Corporation (NVDA) carries a higher beta of 1.73 — meaning larger drawdowns in market downturns, which matters significantly when you cannot wait years for a recovery. Both have compounded well over 10 years (AMAT: +1926%, NVDA: +225.3%), confirming both are viable long-term holds — but the lower-volatility option typically results in less emotional selling during corrections. Retirement portfolios generally favour predictability over maximum returns. Consult a financial advisor before making allocation decisions.

Both stocks operate in the Technology sector, making this a peer-level intra-sector comparison — the same macro tailwinds and headwinds will affect both. These fundamental differences mean investors should not choose between them on a single metric — the "better stock" depends entirely on which of these characteristics aligns with your investment strategy.