Forget Nvidia shares! I am considering buying this FTSE 250 technical star instead

Nvidia (NASDAQ:NVDA) shares remain popular with UK investors. However, I'm looking for something closer to home.

Specifically, I look at a FTSE 250 a technology share that – like Nvidia – has a good track record of outperforming market benchmarks.

Its shares are up 81% over the past five years, and 543% over the past decade. And I think there is more to go as the digital revolution continues.

What am I talking about? Softcat (LSE:SCT), a share that recently posted blockbuster trading numbers. Its shares last rose 13% on Thursday (October 24).

The predictions were hit again

Softcat offers a wide range of technical services, and is an expert in areas including cloud computing, IT infrastructure, networking, and cyber security.

Results today showed total invoiced revenue rose 11.3% in the 12 months to July, at £2.85bn. This saw operating profit rise by 9.3%, to £154.1m and slightly beat City estimates.

Net profit was up 11.7% year-on-year at £417.8m.

New records

Softcat said its record result shows “continuous improvement of our technology and service proposition as we continue to scale, making it easier for customers and sellers to do business“. It also said last year's numbers “[reflected] industry trends involving data and AI“.

The business is successfully expanding its employee base to take advantage of such opportunities, as these results show. Its peak value has increased by 14.3% over the past year.

Finally, Softcat said its cash conversion rate rose to 95.9% from 93.2% in fiscal 2023.

This enabled it to increase its annual dividend by 6.4%, to 26.6p. It also increased its special dividend year-on-year, to 20.9p.

A bright idea

Looking forward, Softcat said “we expect to deliver another year of double-digit gross profit growth and high single-digit operating profit growth“.

I am not surprised by the firm's strength. It has proven adept at growing sales with existing customers, as well as adding new customers to its books.

As a potential investor, I am also motivated by exceptional cash generation and a strong balance sheet. This gives it the opportunity to continue investing in expansion to capitalize on its growing markets.

What about Nvidia?

Now don't get me wrong. Nvidia remains one of the hottest growth stocks in my opinion.

It's not just a good game in the artificial intelligence (AI) revolution. Sales of its graphics processing units (GPUs) may take off as the metaverse, quantum computing, gaming, and data center segments grow.

However, the chip maker also faces major threats, such as potential supply chain problems, economic slowdown, growing competition, and growing trade tensions between the US and China.

However these threats are not factored into Nvidia's share price, in my opinion. Today it trades at a sky-high forward price-to-earnings (P/E) ratio of 50.8 times.

Softcat is vulnerable to economic and increasing competition. It is also heavily dependent on Britain's slow-growing economy to drive revenue.

However, I think its valuation is very reasonable given these risks. Indeed, the P/E multiple is much lower than Nvidia's, at 26.7 times.

In fact, given its long track record of strong, forecast-beating earnings, I think Softcat shares could be a boon for my portfolio. If I had the money to spend today on a technology share, Softcat would be at the top of my list.