IBM vs NVIDIA Which Performs Better?

IBM and NVIDIA are two prominent companies in the technology sector that offer investors unique opportunities for growth and profit. IBM, an established leader in the information technology industry, has a long history of innovation and reliable performance. On the other hand, NVIDIA is known for its cutting-edge graphics processing units and artificial intelligence technologies. Both companies have experienced fluctuations in their stock prices in recent years, making them attractive options for investors seeking to diversify their portfolios and capitalize on the rapidly evolving tech market.

IBM or NVIDIA?

When comparing IBM and NVIDIA, different investors may prioritize various metrics based on their investment strategies and goals. So, ask yourself what type of investor you are. This will guide you in determining which metrics are most important for your investment decision between IBM and NVIDIA.

Dividend Investors:

Dividend investors look for stable and growing income streams, using dividend metrics to assess potential investments. A company's dividend yield essentially measures the size of its dividend relative to the total market value of the company. IBM has a dividend yield of 2.8%, while NVIDIA has a dividend yield of 0.02%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. IBM reports a 5-year dividend growth of 1.32% year and a payout ratio of 95.65%. On the other hand, NVIDIA reports a 5-year dividend growth of -23.48% year and a payout ratio of 1.09%.

Value Investors:

Value investors focus on financial metrics to determine a stock's intrinsic value compared to its market value. The Price-to-Earnings (P/E) Ratio links stock price to a company's earnings per share, with IBM P/E ratio at 34.25 and NVIDIA's P/E ratio at 55.40. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. IBM P/B ratio is 8.96 while NVIDIA's P/B ratio is 53.03.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, IBM has seen a 5-year revenue growth of -0.22%, while NVIDIA's is 1.68%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with IBM's ROE at 27.14% and NVIDIA's ROE at 116.71%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $234.22 for IBM and $141.31 for NVIDIA. Over the past year, IBM's prices ranged from $157.89 to $238.38, with a yearly change of 50.98%. NVIDIA's prices fluctuated between $45.83 and $152.89, with a yearly change of 233.60%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.