3 Simple Reasons I'd Rather Own Nvidia Than Spacex

1. There’s no comparison on price

SpaceX went public with a sky-high valuation, trading at roughly 100 times sales and a market cap of nearly $2 trillion. After bouncing up and down, the stock is trading at nearly the same price it opened on the market, $150.

The company delivered strong second-quarter results, with revenue up 92% to $4.1 billion as it benefited from new cloud services agreements with Anthropic and Google, and 66% growth in its Starlink satellite internet business.

However, the company still reported a generally accepted accounting principles (GAAP) net loss of $541 million in the quarter, as Starlink, or the connectivity segment, is the only one of its three segments that is profitable.

Even baking in aggressive growth expectations over the next six quarters, SpaceX still trades at close to 20 times 2027 sales. Analysts do expect it to turn profitable in the third quarter, which will ly depend on its AI business, which is growing by leasing out computing capacity, much the neocloud companies do.

Nvidia, on the other hand, is growing just as fast as SpaceX is right now, but with a much more profitable business and a much lower valuation. Nvidia just grew revenue by 106% in the second quarter, with an operating margin of 66%. The company could reach annual revenue of $1 trillion as soon as 2028 (fiscal 2029).

Despite its superior growth, the stock essentially trades in line with the S&P 500 at a price-to-earnings ratio of 28.5, even though it’s expected to grow much faster than the broad market.

Space Exploration Technologies Stock Quote

NASDAQ: SPCX

Space Exploration Technologies

Today’s Change

(0.44%) $0.65

Current Price

$148.68

Key Data Points

Market Cap

$2.0TMarket cap calculated using publicly traded s outstanding only. Does not include unlisted, private, or dual-class non-traded s. Implied market cap may vary.

Day’s Range

$146.00 – $149.67

52wk Range

$104.83 – $225.64

Volume

54.6M

Avg Vol

93.3M

2. SpaceX’s success is also Nvidia’s

In addition to being two of the most valuable companies in the world, SpaceX and Nvidia are also close partners.

Nvidia owns 122.8 million s of SpaceX, worth close to $20 billion, and SpaceX has said it will exclusively use Nvidia chips across its business. In fact, CEO Elon Musk paid Nvidia a high compliment, saying, “We think the Vera Rubin architecture is the best architecture.”

If SpaceX is building with Nvidia chips, then SpaceX’s growth benefits Nvidia as well, and Nvidia chips are ly to be a significant line item for SpaceX, especially if it continues to aggressively grow its AI business. Considering Nvidia’s much lower valuation, owning its s might be a better way to get exposure to SpaceX’s growth than owning SpaceX itself.

Nvidia Stock Quote

NASDAQ: NVDA

Nvidia

Premium Feature

Moneyball Superscore

95/100

Today’s Change

(0.22%) $0.49

Current Price

$225.07

Key Data Points

Market Cap

$5.4TMarket cap calculated using publicly traded s outstanding only. Does not include unlisted, private, or dual-class non-traded s. Implied market cap may vary.

Day’s Range

$223.13 – $226.94

52wk Range

$164.27 – $236.54

Volume

89.9M

Avg Vol

125.5M

Gross Margin

74.67%

Dividend Yield

0.23%

3. The SpaceX thesis still has a lot to prove

SpaceX’s $2 trillion valuation owes a lot to CEO Elon Musk’s reputation and his bold vision of the future, which includes space-based data centers and eventually colonizing Mars.

In its prospectus, the company said it identified a total addressable market of $28.5 trillion, nearly all of which is based on future developments, most of which are in artificial intelligence. Another company with such a futuristic vision probably wouldn’t fetch such a high valuation, though Musk has a well-deserved reputation as a visionary and a disrupter.

Nvidia’s valuation, on the other hand, is largely based on the current reality where the company is dominating the market for AI chips and is well-positioned to continue doing so, as SpaceX’s endorsement shows.

Nvidia can still benefit from optionality, or some new product or new use for its products in the future, but it doesn’t need that for the stock to be successful. Its current results easily justify its valuation.

Overall, Nvidia is a much lower-risk stock than SpaceX, but it still offers huge growth potential. That’s a winning formula for me.