Rolls-Royce (LSE: RR.) and Nvidia (NASDAQ: NVDA) have probably been the two most popular growth stocks in the UK this year. Both have performed really well – the former has nearly doubled in price, while the latter is up about 45%.
But which one is the better stock to consider buying for 2026 and beyond? Let’s put them side by side and see which has more potential right now.
Growth drivers
The first thing I want to do is take a big picture approach and compare their operations. This will give us more insight into their growth potential.
Today, Rolls-Royce operates in several areas including civil aerospace, defence, power systems, and nuclear energy. So, there’s plenty of growth potential here.
Personally, I think the company’s exposure to nuclear energy could be a major growth driver for the company. Rolls-Royce has significant expertise in small modular reactors (SMRs) and the market for these is expected to grow tenfold by 2033.
Turning to Nvidia, it has a more narrow business model at first glance, because it simply designs high-powered computing hardware and the associated software.
However, in the years ahead, Nvidia’s hardware is likely to be used in a range of high-growth industries including data centres (for AI), robotics and humanoid robots, and autonomous driving. It’s worth noting that the market for humanoids is expected to boom in the years ahead – analysts at Citi Global Insights believe it could be worth $7trn by 2050.
The financials
Moving on to the financials, I’ve put some key stats for each company in the table below. Some are forward looking and some are backward looking.
| Rolls-Royce | Nvidia | |
| 5-year total revenue growth | 16% | 1,095% |
| Forecast revenue growth this financial year | 11% | 58% |
| Forecast revenue growth next financial year | 10% | 34% |
| Forecast earnings growth this financial year | 41% | 52% |
| Forecast earnings growth next financial year | 14% | 42% |
| Return on capital employed last year | 15.4% | 87.1% |
Looking at the table, we can see that Nvidia is growing at a much faster pace than Rolls-Royce. It’s also far more profitable, and growing its earnings at a faster clip.
Valuations
In terms of valuation, Rolls-Royce currently has a price-to-earnings (P/E) ratio of 40, falling to 35 using next year’s earnings forecast. By contrast, Nvidia has a P/E ratio of 43, falling to 30.
Zooming in on the price-to-earnings-to-growth (PEG) ratio, Rolls-Royce is on 1.02 while Nvidia is on 0.83. So, Nvidia is cheaper relative to earnings growth.
Share price targets
Looking at analyst price targets, the average for Rolls-Royce is 1,119p. That’s about 2% below the current share price.
For Nvidia, it’s $216. That’s about 12% above the current share price.
Risks
Finally, thinking about risks, both companies face them.
For Rolls-Royce, I think the big risks are a slowdown in civil aviation, product reliability issues, and higher costs/supply chain issues.
For Nvidia, the biggest ones are probably a slowdown in AI spending, new products from rivals such as Broadcom and AMD, and China issues.
My pick
Putting this all together, I reckon Nvidia is the better stock of the two, taking a minimum one-year view. Not only is it cheaper but it’s growing faster and is much more profitable.
Having said that, it’s not a stock I’d rush out to buy today given its move higher this year. In my view, there are better growth stocks in the market right now.
