Better Artificial Intelligence Stock: Arm Holdings vs. SK Hynix
One designs chips; the other manufactures them, and their valuations tell starkly different stories about growth versus value.
Overview
The race to power artificial intelligence has created two distinct champions in Arm (NASDAQ:ARM) and SK Hynix (NASDAQ:SKHY). Both companies serve the high-demand chip market, but they play very different roles.
Arm designs the energy-efficient architectures used by almost every smartphone maker, while SK Hynix produces the massive amounts of memory required for high-performance computing. Comparing these two businesses reveals a choice between a high-margin licensing model and a capital-intensive manufacturing powerhouse.
Details
Arm licenses its intellectual property to chip designers, although now, it's manufacturing hardware as well. This allows the company to collect royalties on hundreds of billions of chips in the semiconductor stocks space while keeping overhead relatively low. Its architecture is becoming increasingly vital in data centers where power efficiency is a top priority for cloud providers.
Source
Originally published at www.fool.com.