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How GPU Stocks Have Outperformed Semiconductor Stocks

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Dec. 4 2020, Updated 10:53 a.m. ET

Snapshot of fiscal 1Q17

We’ve learned that NVIDIA (NVDA) reported strong growth in fiscal 1Q17, driven by the strong adoption of deep learning technology in various sectors.

One drawback amid NVDA’s positive earnings was the company’s failure to secure an alternative to the licensing fees it’s been receiving from Intel (INTC). The contract between the two expires in March 2017.

Let’s see how investors reacted to NVIDIA’s announcements in fiscal 1Q17.

[marketrealist-chart id=1315658]

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NVIDIA’s stock reaches a new 52-week high

NVIDIA’s stock rose 18.6% in just three days after the company announced its fiscal 1Q17 earnings. The stock is currently hovering above $40. It broke its 52-week high of $37.46 before it announced its earnings.

NVIDIA’s stock rose more than 7% in the after-hours trading session after its fiscal 1Q17 earnings were announced. A similar rise of more than 7% was witnessed in the February 17, 2016, after-hours trading session, after NVDA announced its fiscal 4Q16 results.

GPU stocks outperform overall semiconductor stocks

GPU (graphics processing unit) providers NVIDIA and Advanced Micro Devices (AMD) have outperformed other semiconductor stocks. NVIDIA’s stock price has risen by 82.3% in the past year, and it’s still growing with no sign of a slowdown.

AMD’s stock price has risen by 51.5% during the same period. Contrasting performances were reported by Intel (INTC) and Qualcomm (QCOM), which have fallen by 8.8% and 26%, respectively, in the past year. The S&P 500 Index has also fallen by 1.6% in the past year.

About NVIDIA’s stock

NVIDIA has a market capitalization of $19.4 billion, of which 4.7% is held across 85 ETFs. The iShares Russell 1000 Value ETF (IWD) invests in large-capitalization US equities across various sectors, including technology. IWD has 0.19% holdings in NVDA, 1.3% in INTC, and 0.66% in QCOM.

NVIDIA has a PE (price-to-earnings) ratio of 32.94x compared to Intel and Qualcomm’s ratios of 12.71x, and 16.25x, respectively. This indicates that NVIDIA’s stock price is 32.94 times its earnings per share and is priced higher than its peers.

The launch of NVIDIA’s new products and the emerging trends in the VR, deep learning, and autonomous car spaces are likely to push the company’s stock upward in the long term.

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