NVIDIA Corporation (NVDA)vs Netflix, Inc. (NFLX)

Quick verdict

NVIDIA (NVDA) and Netflix (NFLX) represent two distinct profiles within growth-oriented sectors. NVDA trades at a trailing P/E of 30.92 but a forward P/E of just 10.38, alongside a PEG of 0.28, reflecting expectations of substantial earnings expansion, supported by a 65.99% three-year EPS CAGR. NFLX carries a trailing P/E of 21.82, a higher forward P/E of 32.49, and a PEG of 0.64, indicating slower anticipated growth relative to NVDA. NVDA shows superior profitability metrics, including a 62.97% net margin and 111.66% ROE, versus NFLX's 28.52% net margin and 47.92% ROE. NVDA also holds a stronger overall score (4 vs 2) across the assessed verdicts. Momentum has favoured NFLX recently, with a 106.6% one-year return versus NVDA's 75.11%. Both carry elevated volatility, with betas of 2.211 (NVDA) and 1.517 (NFLX).

2-year relative performance

At-a-glance comparison

Business model and revenue mix

NVIDIA designs graphics, computing, and networking hardware, with its Graphics division built around GeForce GPUs serving PC gaming, alongside the GeForce NOW cloud gaming service, positioning it within semiconductor infrastructure supporting computing and AI workloads. Netflix operates as a global entertainment provider, generating revenue primarily through subscription-based streaming services. NVDA operates in the Technology sector under Semiconductors, exposing it to hardware cycles and capital expenditure trends across global computing markets. NFLX sits within Communication Services under Entertainment, with revenue tied to subscriber growth, content spend, and pricing. NVDA's business is capital-intensive and cyclical relative to semiconductor demand, evidenced by its 65.47% three-year revenue CAGR, while NFLX's model relies on recurring subscription revenue, reflected in a steadier 15.85% three-year revenue CAGR, indicating differing growth trajectories and demand drivers between the two companies.

Valuation

NVDA's valuation shows a trailing P/E of 30.92 against a forward P/E of 10.38, a significant divergence suggesting the market anticipates sharp earnings growth, further reflected in its low PEG ratio of 0.28. Its price-to-sales ratio of 19.38 and price-to-book of 25.2 are notably elevated, while EV/EBITDA stands at 25.45. NFLX presents a trailing P/E of 21.82, lower than NVDA's, but its forward P/E of 32.49 exceeds NVDA's, implying expected earnings growth deceleration, consistent with its higher PEG of 0.64. NFLX's price-to-sales of 6.19 and price-to-book of 9.35 are considerably lower than NVDA's, as is its EV/EBITDA of 9.66. Both companies show similar free cash flow yields, at 4.34% (NVDA) and 4.38% (NFLX). The valuation verdict assigns both a B overall grade.

Growth profile

NVDA demonstrates markedly stronger growth metrics, with a three-year revenue CAGR of 65.47% and five-year revenue CAGR of 21.13%, compared to NFLX's 15.85% and 16.79% respectively over the same periods. On earnings, NVDA's three-year EPS CAGR of 65.99% and five-year figure of 32.08% substantially outpace NFLX's 27.09% and 14.39%. This gap underpins NVDA's growth verdict of A, reflecting significantly faster historical expansion in both top-line and bottom-line figures. NFLX's growth, while positive and consistent, trails NVDA across every comparable growth metric provided. The scale of NVDA's three-year revenue and EPS growth suggests a period of exceptional expansion, potentially linked to demand within its semiconductor and computing segments, whereas NFLX's growth pattern appears more moderate and steady, consistent with a maturing subscription-based entertainment business.

Profitability and quality

NVDA exhibits superior profitability across all measured metrics, with a gross margin of 74.15%, operating margin of 64.02%, and net margin of 62.97%. Its return on equity of 111.66% and return on invested capital of 62.99% are substantially higher than NFLX's figures. NFLX reports a gross margin of 49.03%, operating margin of 29.72%, and net margin of 28.52%, alongside a return on equity of 47.92% and return on invested capital of 24.36%. While NFLX's margins are respectable for the entertainment industry, NVDA's figures indicate markedly higher operational efficiency and capital returns, consistent with its A grade for both quality and income verdicts. Both companies received an A rating for quality overall, though the underlying figures show NVDA generating substantially more profit per dollar of revenue and capital employed than NFLX.

Balance-sheet risk

NVDA holds cash of approximately $10.1 billion against total debt of roughly $69.3 billion, with a net debt/EBITDA ratio of -0.17, indicating net cash position relative to earnings. Its current ratio of 3.44 signals strong short-term liquidity, and interest coverage of 27.55 indicates ample capacity to service debt obligations. NFLX reports a larger cash position of approximately $79.9 billion against total debt of about $115.7 billion, with a net debt/EBITDA of -0.82, also indicating a net cash position. However, NFLX's current ratio of 1.14 is considerably lower than NVDA's, suggesting tighter short-term liquidity, while its interest coverage of 21.13 remains solid but below NVDA's level. Both companies carry the A balance sheet verdict, reflecting overall financial stability, though NVDA's liquidity ratios point to a more comfortable short-term financial cushion.

Price performance and shareholder returns

Over one year, NFLX has returned 106.6% compared to NVDA's 75.11%, while year-to-date NFLX leads with 45% against NVDA's 2.83%. Over longer horizons, the pattern shifts: NVDA's five-year annualised return of 32.41% edges out NFLX's 30.63%, though NVDA's three-year annualised return of 3.02% trails NFLX's 38.86% substantially. NVDA's maximum five-year drawdown of -29.43% is shallower than NFLX's -57.42%, indicating NFLX experienced a deeper peak-to-trough decline historically. NVDA carries a higher beta of 2.211 versus NFLX's 1.517, suggesting greater sensitivity to broader market movements. The momentum verdict assigns both a B grade. These figures illustrate differing return patterns across time frames, with NFLX showing stronger recent and three-year performance, while NVDA's longer-term five-year return and shallower drawdown suggest different risk-return characteristics between the two.

Which stock fits which investor

Based on the supplied verdicts, NVDA is identified as best suited for investors prioritising growth, quality, and income, reflecting its A grades in growth, quality, and income categories, alongside its higher overall score of 4. NFLX is identified as best suited for value-oriented considerations, per the bestFor verdict, despite carrying a B valuation grade similar to NVDA. NVDA's style tag of "high-growth, value" and NFLX's tag of "high-quality, high-volatility" further differentiate their profiles. Investors focused on profitability metrics and revenue expansion may find NVDA's data points, such as its 62.99% ROIC and 65.47% three-year revenue CAGR, notable. Those weighing valuation multiples relative to near-term earnings may consider NFLX's lower price-to-sales ratio of 6.19 and EV/EBITDA of 9.66 relevant to their analysis.

• Value: NFLX
• Growth: NVDA
• Income: NVDA
• Quality: NVDA

Frequently asked questions

Which company shows stronger revenue growth, NVDA or NFLX?

NVDA shows stronger revenue growth, with a three-year CAGR of 65.47% and five-year CAGR of 21.13%, compared to NFLX's 15.85% and 16.79% over the same respective periods.

How do the valuation multiples of NVDA and NFLX compare?

NVDA has a trailing P/E of 30.92 and forward P/E of 10.38, with a PEG of 0.28. NFLX has a trailing P/E of 21.82 and forward P/E of 32.49, with a PEG of 0.64, suggesting different growth expectations relative to price.

Which stock has performed better recently?

NFLX has outperformed over one year, returning 106.6% versus NVDA's 75.11%, and year-to-date with 45% versus 2.83%. Over five years annualised, NVDA's 32.41% slightly exceeds NFLX's 30.63%.

How do NVDA and NFLX compare on profitability?

NVDA reports higher profitability across all metrics, including a 62.97% net margin and 111.66% ROE, compared to NFLX's 28.52% net margin and 47.92% ROE.

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