Which Nasdaq Sell-Off Stock Is Cheaper: Palo Alto Networks or Nvidia?

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Ryan Vanzo, The Motley Fool

Sat, Apr 5, 2025, 7:32 AM 4 min read

The tech sell-off of 2025 has created respective buying opportunities. Last year, the valuations for countless tech businesses went done the roof, making it hard to bargain hunt. If you've been waiting for the close clip to leap successful oregon adhd to your positions, present could beryllium that time.

Two iconic businesses successful peculiar person seen their stock prices slump truthful acold this year: Palo Alto Networks (NASDAQ: PANW) and Nvidia (NASDAQ: NVDA). Both companies person compelling concern theses close now, but 1 stands taller with greater semipermanent upside.

Before jumping into which banal is simply a amended buy, it's important to archetypal recognize the captious differences betwixt each company's concern model.

Nvidia is chiefly a chipmaker that produces graphics processing units, commonly referred to arsenic GPUs. GPUs are specialized chips that marque a ton of technologies imaginable -- everything from gaming and photograph editing to instrumentality learning and artificial quality (AI) applications. In a nutshell, Nvidia is simply a large supplier of captious components to a wide array of ample and increasing industries, the AI manufacture being the astir promising today.

Palo Alto Networks, meanwhile, tin beryllium thought of arsenic a cybersecurity company. Its bundle delivers web security, unreality security, and a big of different information products meant to support businesses from atrocious actors. Its merchandise suite is impressive, boasting much than 80,000 endeavor customers worldwide, with billions of protected endpoints.

Both GPU manufacturing and cybersecurity are increasing extremity markets. That's evidenced by each company's premium valuation. Nvidia shares commercialized astatine 20.6 times income versus 14 times income for Palo Alto Networks. But earlier you deliberation Palo Alto Networks is the cheaper stock, it's important to cheque the maturation rates of each business. Wall Street analysts expect Nvidia to turn astatine much than 4 times faster than Palo Alto Networks adjacent quarter. Nvidia besides has importantly higher nett margins, aided by its best-in-class chips that customers, particularly AI customers, request supra astir each competing GPU.

Due to Nvidia's higher maturation rates, shares commercialized astatine conscionable 13 times guardant income -- lone a tiny premium to Palo Alto Networks' 12.2 times guardant income valuation. When you adhd successful its acold superior nett margins, Nvidia looks similar the wide victor today. But there's 1 different crushed wherefore Nvidia is simply a large stake for the adjacent fewer years, oregon adjacent the adjacent fewer decades.

Nvidia isn't conscionable riding the AI question to growth. The institution invested successful AI early, meaning its chips surpassed the show of competing chips for this exertion galore years ago. In fact, it was company's motorboat of CUDA -- its proprietary Compute Unified Device Architecture -- mode backmost successful 2006 that has arguably fixed Nvidia the borderline it maintains contiguous erstwhile it comes to spot show and wide marketplace share.

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