2026-02-14 · 5 min read
AI CapEx Boom: A Quantitative Look at NVIDIA's Valuation vs. Peers ANET & AVGO
The Great Divergence: Quantifying AI's Impact on Valuations As of early 2026, the unprecedented wave of AI-driven capital expenditures from hyperscalers has fundamentally reshaped the semiconductor and data center networ...
The Great Divergence: Quantifying AI's Impact on Valuations
As of early 2026, the unprecedented wave of AI-driven capital expenditures from hyperscalers has fundamentally reshaped the semiconductor and data center networking landscape. The market is no longer rewarding participation alone; it is ruthlessly pricing for performance, creating a significant valuation gap between market leaders and the broader ecosystem. A granular analysis of SEC filings reveals a stark divergence in financial trajectory, particularly when comparing the hyper-growth of NVIDIA CORP (NVDA) with the more moderated, albeit strong, performance of peers like Broadcom Inc. (AVGO) and ARISTA NETWORKS, INC. (ANET). This report leverages Edwyn's platform to dissect the key metrics driving this valuation schism.
NVIDIA: A Generational Outlier in Growth and Profitability
NVIDIA's financial ascent is nothing short of extraordinary. Based on its FY2025 results, the company reported revenues of $130.5 billion, representing a staggering 114.2% year-over-year increase from the $60.9 billion recorded in FY2024. This isn't just top-line growth; it's accompanied by a dramatic expansion in profitability. Operating income surged to $81.5 billion in FY2025, yielding an operating margin of 62.4%. To put this in perspective, for every dollar of revenue, NVIDIA is generating over 62 cents in operating profit. This level of efficiency at scale is what underpins its premium valuation multiples. The company's ability to convert this profit to shareholder value is further evidenced by its Return on Equity (ROE), calculated as Net Income divided by Shareholder Equity, which stood at an exceptional 91.9% ($72.88B / $79.33B) for the fiscal year.
5-Year Income Statement
View Full Report →Broadcom and Arista: Strong Fundamentals in a Different Weight Class
In contrast, Broadcom and Arista Networks present profiles of robust, high-quality businesses that are nonetheless operating on a different growth vector. Broadcom posted FY2025 revenue of $63.9 billion, a solid 23.9% increase from FY2024. While impressive, this growth rate is dwarfed by NVIDIA's. Broadcom's operating margin for FY2025 was 39.9% ($25.5B / $63.9B), a testament to its strong market position but significantly trailing NVIDIA's profitability. Its ROE of 28.5% ($23.1B / $81.3B) is healthy for a mature tech firm but highlights the capital efficiency gap.
Arista Networks, a pure-play on high-performance data center networking, also demonstrates strong execution. For its latest reported fiscal year (FY2024), revenues grew 19.5% to $7.0 billion. Its operating margin of 42.1% ($2.9B / $7.0B) is best-in-class within networking and even surpasses Broadcom's, underscoring its focused operational excellence. However, the sheer scale and growth multiple of NVIDIA's data center segment places Arista in a different investment category for now.
A Practical Workflow for Identifying AI Alpha in Edwyn
For financial operators seeking to replicate this analysis, the process on the Edwyn platform is straightforward. Start by using the Underpriced Stocks Screener to isolate companies within the semiconductor and networking hardware sectors. From there, perform a deep dive on individual company pages to extract the raw financial data from their SEC filings. The key is to move beyond simple market cap and deconstruct a company's Enterprise Value (EV) to understand how debt and cash impact valuation multiples like EV/EBITDA.
Below is an interactive widget that calculates the Enterprise Value for NVIDIA, providing a clear bridge from its market capitalization. This allows for more accurate peer comparisons using enterprise multiples.
Live Valuation Data
View Full Report →Conclusion: Justified Premiums and the Path Forward
The quantitative evidence is clear: NVIDIA's valuation premium is not based on narrative alone but is supported by superior, objectively verifiable financial results. Its 114.2% revenue growth and 62.4% operating margin place it in a league of its own. While Broadcom and Arista are high-performing companies, their growth and profitability profiles justify their more conventional valuations. The central question for investors moving beyond 2025 is the sustainability of this divergence. Any deceleration in NVIDIA's growth or a meaningful acceleration from competitors could trigger a rapid recalibration of multiples across the sector.
Apply This in Edwyn
Incorporate these analytical techniques into your own investment process using Edwyn's suite of institutional-grade tools. This framework allows you to move beyond headlines and base decisions on fundamental financial data.
- Enterprise Value Calculator: Use the EV bridge to normalize for capital structure differences, enabling a true apples-to-apples comparison of companies like NVDA and AVGO on metrics such as EV/EBITDA.
- Compare Stocks: Leverage the stock comparison tool to place two or more companies side-by-side, instantly visualizing disparities in growth rates, margins, and returns on capital.
- SEC EDGAR Database: Go directly to the source. Use Edwyn's integrated SEC EDGAR Database to pull 10-K and 10-Q filings, verifying every data point and understanding management's commentary.