Nvidia vs Arm stock: Dan Niles picks a side

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Written on Sep 18, 2023

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Dan Niles picks Nvidia Corp over Arm stock as an AI play.
He explained why today on CNBC's "Squawk Box Asia".
Nvidia stock has lost more than 10% in recent weeks.

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Dan Niles is not comfortable with investing in Arm Holdings plc (NASDAQ: ARM) even though it was very well-received as it went live on Nasdaq this week.

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Here’s why Nvidia stock is a better pick

At writing, the chip design company is trading at 170 times – a valuation that the hedge fund manager dubs far from justified considering its revenue is expected to grow about 20% in 2024.

On CNBC’s “Squawk Box Asia”, Dan Niles of Satori Fund picked Nvidia Corp (NASDAQ: NVDA) today as a better investment to play the AI space particularly now that it has lost over 10% in recent weeks.

Investors who felt like they missed it before, can now buy it at 31 times for PE which is down from about 50 or so before because it went up so much after they reported.

Last week, Nvidia invested in Databricks to continue expanding its footprint in artificial intelligence (source).

Nvidia is growing at an explosive pace

Part of the reason that Dan Niles is bullish on Nvidia Corp is because the semiconductor behemoth expects its revenue to shoot up another 170% in its current financial quarter.

That’s miles ahead of the pace at which Arm is expected to grow at least in the near to medium term.

If you’re thinking of investing in AI, you have to start with Nvidia because it’s not that expensive when you look at it relative to its growth rate.

Interestingly, Nvidia was previously reported as interested in being an anchor investor in Arm Holdings plc. Other AI names that Niles sees as great investments based on revenue growth include Intel, Amazon, Meta Platforms, and Alphabet Inc.