MRVL is overvalued based on forward P/E and DCF metrics; not a buy at current prices.

Marvell and Qualcomm are semiconductor companies that adopt an asset-less business model . Marvell is already benefiting from the AI spending boom , while Qualcomm is poised to achieve significant revenue growth from this sector.

Based on the above, which of these two semiconductor stocks is a better buy option at current market prices? This is the question I want to answer in this video by comparing them across several important categories, including rating, to determine which one I see as the best buy today.

Meanwhile, Marvell's revenue grew to $9.45 billion over the past twelve months. This represents an increase from less than $1 billion 10 years ago. Marvell's growth has been much more significant, and even during the past twelve months, Marvell's growth has been more explosive.

Qualcomm again leads in absolute terms at 23.5%, but Marvell is the best company in terms of growth and expansion. This was similar to what we found when looking at revenues as well.

Marvell's operating profit margins have increased from -10% in 2015 to 16.8% over the past twelve months. Meanwhile, Marvell also improved this metric, but only reached 12.6%, up from around 4% in 2017.

Based on a forward price-to-earnings ratio , Marvell shares are trading at 42.5, which is almost three times more expensive than Qualcomm, which is trading at 14. As I mentioned, the main reason for this is the gains generated by artificial intelligence.

Marvell is already taking advantage of this growth opportunity and proving its success, while Qualcomm is only suffering from the downsides of the AI boom.

Therefore , I also like to look at another valuation metric, which is discounted cash flow, where I calculated the fair value of Marvell stock at $200. I estimate the company’s future cash flows and discount those flows using the weighted average cost of capital to arrive at my fair value estimate.

The current market price is $287, so Marvell stock seems overvalued to me whether measured on a forward price-to-earnings basis or on a discounted cash flow basis.

Marvel is already thriving, but valuation precedes fundamentals. So, if I had to decide today which of these two companies is better to buy , it would be Qualcomm.

Indeed, I own Qualcomm shares and I am not interested in owning Marvell shares at any price close to these market prices.