Compare Texas Instruments Incorporated (TXN) vs NVIDIA Corporation (NVDA) vs Taiwan Semiconductor Manufacturing Company Limited (TSM) Stock

Taiwan Semiconductor Manufacturing Company Limited (TSM) offers the better valuation at 35.1x trailing P/E (0.8x forward), making it the more compelling value choice. Analysts rate Texas Instruments Incorporated (TXN) a "Buy" — based on 65 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, Taiwan Semiconductor Manufacturing Company Limited (TSM) is the cheapest at 35.1x versus Texas Instruments Incorporated at 38.9x. On forward P/E, Taiwan Semiconductor Manufacturing Company Limited is actually cheaper at 0.8x. The PEG ratio (P/E divided by earnings growth rate) is the most growth-adjusted single valuation metric: Taiwan Semiconductor Manufacturing Company Limited wins at 0.03x versus NVIDIA Corporation's 0.23x — 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 +33.5% for Texas Instruments Incorporated (TXN). 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 TXN's +373.7%. 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), Texas Instruments Incorporated (TXN) is the lower-risk stock at 1.29β versus NVIDIA Corporation's 1.73β — meaning NVDA is approximately 33% more volatile than TXN relative to the S&P 500. On balance sheet safety, NVIDIA Corporation (NVDA) carries a lower debt/equity ratio of 7% versus 86% for Texas Instruments Incorporated — giving it more financial flexibility in a downturn.

NVIDIA Corporation (NVDA) is the more profitable company, earning 55.6% net margin versus 28.3% for Texas Instruments Incorporated — 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 34.1% for TXN. 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, Taiwan Semiconductor Manufacturing Company Limited (TSM) is the more undervalued stock at a PEG of 0.03x versus NVIDIA Corporation's 0.23x. A PEG below 1.0 is traditionally considered the threshold for growth-adjusted undervaluation. On forward earnings alone, Taiwan Semiconductor Manufacturing Company Limited (TSM) trades at 0.8x forward P/E versus 33.0x for Texas Instruments Incorporated — 32.2x 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, TXN (2.6% yield), TSM (0.8% yield) pay a dividend. NVDA does not pay a meaningful dividend and should not be held primarily for income.

For long-horizon retirement investors, Taiwan Semiconductor Manufacturing Company Limited (TSM) is the stronger choice — it scores higher on the combination of lower volatility, dividend reliability, and long-term compounding (0.8% yield, +1552% 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 (TSM: +1552%, 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. TXN, TSM pay a dividend while NVDA does not, making them suitable for different income and tax situations. 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.