$NVDA · Parkev Tatevosian, CFA · 2026-10-26

Today I wanted to compare Nvidia and MetaPlatforms to answer which one I think is the second best stock to buy right now. These two stocks have occupied the first and second positions in my rankings over the past few months.

I am very optimistic about these two companies. I own shares in both of them. They are two of the biggest centers in my portfolio after Netflix , which is the biggest center in my portfolio.

I wanted to start by comparing the future prospects for earnings per share for both Nvidia and MetaPlatforms. You can see Nvidia's earnings growth projections for the next few years in this chart, and they have increased significantly since 2023.

That was around the time of ChatGPT's launch in late 2022, and the market quickly realized that Nvidia would be the beneficiary of this new development.

Its earnings per share prospects have risen from around 20% in 2023 for the coming years, to today as high as 50% for Nvidia’s future earnings per share growth. I believe this is a realistic figure.

Therefore, those investments from Meta, Alphabet, Amazon and others will be great news for Nvidia stock investors over the next few years.

This is more important for Meta than it is for Nvidia.

As for Nvidia, it operates on an asset-light business model. Remember that it does not carry out any of the manufacturing processes for its products. It handles the design, research and development, and then contracts the manufacturing to TSMC (Taiwan Semiconductor Manufacturing Company) and other suppliers it deals with.

Therefore, its cash flow from operations is less important, although it is still important because Nvidia uses this cash flow for strategic purposes. There are some investors who are skeptical of those arrangements, i.e., circular financing, aren't there?

Nvidia uses its extremely strong balance sheet and great ability to generate cash flow to offer better terms to its customers to facilitate more sales earlier than would otherwise happen , and in larger quantities than would happen under normal circumstances.

Therefore, Nvidia has made several equity investments in many of its customers and suppliers in order to ease supply constraints at the industry level, and bridge the gap between the huge capital investments going into these data centers and large-scale language model development , and the time it takes for these investments to generate cash flow that returns money to the companies that pay huge sums.

Nvidia also boasts a strong operating cash flow to sales ratio of 44%. Nvidia's operating cash flow to sales ratio rose from 20% in 2017,

Again, I think this metric is more important for Meta than for Nvidia because Meta invests much more capital in the operations side of its business than Nvidia does.

Nvidia's asset- light business model has allowed the company to achieve record levels of return on invested capital. To the point that I don't think it's sustainable at 109%, and it has remained above 100% for a little over a year and a half now.

So any additional quarter of this kind of performance is a bonus , but I don't expect Nvidia to maintain these levels for a long period of time.

However, this AI upgrade cycle is likely to continue for at least another two years until 2028. Perhaps even until 2029, but we don't know yet. It would be speculative to start looking at what will happen in 2029.

But I have enough data from all the different companies I follow and the macroeconomic indicators I look at that investments in artificial intelligence will remain high until 2028.

Therefore, it is likely that Nvidia's performance in this metric at least, and others, will remain high until at least 2028.

But as much as I love Meta with this rating, Nvidia is even cheaper. Its shares are trading at a forward-to-earnings price of 13.4. This is roughly the cheapest price at which I have ever been able to buy Nvidia shares.

After doing all these calculations, I arrived at a value of $345 per share for Nvidia, which is currently trading at $213. So, it seems to me that it is undervalued by 62% at the current market price .

Therefore, these are excellent companies. I am optimistic about both. I own both of them. I am interested in buying more from these two companies. But if I had to choose first and second place today, after evaluating Meta's results, I would say that Meta Platforms is second and Nvidia is first in my rankings.