Contrasting Onto Innovation (NYSE:ONTO) & NVIDIA (NASDAQ:NVDA)

NVIDIA (NASDAQ:NVDA) and Onto Innovation (NYSE:ONTO) are both large-cap technology companies, but which is the superior stock? We will contrast the two businesses based on the strength of their valuation, risk, profitability, institutional ownership, dividends, earnings and analyst recommendations.

Profitability

This table compares NVIDIA and Onto Innovation’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
NVIDIA	63.66%	96.04%	71.00%
Onto Innovation	11.84%	13.44%	10.30%

Analyst Recommendations

This is a summary of current ratings for NVIDIA and Onto Innovation, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
NVIDIA	0	1	50	4	3.05
Onto Innovation	0	1	10	2	3.08

NVIDIA currently has a consensus target price of $324.34, indicating a potential upside of 43.82%. Onto Innovation has a consensus target price of $378.00, indicating a potential upside of 33.72%. Given NVIDIA’s higher probable upside, equities research analysts clearly believe NVIDIA is more favorable than Onto Innovation.

Risk and Volatility

NVIDIA has a beta of 2.22, meaning that its share price is 122% more volatile than the S&P 500. Comparatively, Onto Innovation has a beta of 1.59, meaning that its share price is 59% more volatile than the S&P 500.

Earnings & Valuation

This table compares NVIDIA and Onto Innovation”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
NVIDIA	$215.94 billion	25.17	$120.07 billion	$7.91	28.51
Onto Innovation	$1.01 billion	13.80	$136.76 million	$2.66	106.27

NVIDIA has higher revenue and earnings than Onto Innovation. NVIDIA is trading at a lower price-to-earnings ratio than Onto Innovation, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

65.3% of NVIDIA shares are held by institutional investors. Comparatively, 98.3% of Onto Innovation shares are held by institutional investors. 3.9% of NVIDIA shares are held by insiders. Comparatively, 0.5% of Onto Innovation shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Summary

NVIDIA beats Onto Innovation on 12 of the 15 factors compared between the two stocks.

About NVIDIA

NVIDIA Corporation provides graphics and compute and networking solutions in the United States, Taiwan, China, Hong Kong, and internationally. The Graphics segment offers GeForce GPUs for gaming and PCs, the GeForce NOW game streaming service and related infrastructure, and solutions for gaming platforms; Quadro/NVIDIA RTX GPUs for enterprise workstation graphics; virtual GPU or vGPU software for cloud-based visual and virtual computing; automotive platforms for infotainment systems; and Omniverse software for building and operating metaverse and 3D internet applications. The Compute & Networking segment comprises Data Center computing platforms and end-to-end networking platforms, including Quantum for InfiniBand and Spectrum for Ethernet; NVIDIA DRIVE automated-driving platform and automotive development agreements; Jetson robotics and other embedded platforms; NVIDIA AI Enterprise and other software; and DGX Cloud software and services. The company's products are used in gaming, professional visualization, data center, and automotive markets. It sells its products to original equipment manufacturers, original device manufacturers, system integrators and distributors, independent software vendors, cloud service providers, consumer internet companies, add-in board manufacturers, distributors, automotive manufacturers and tier-1 automotive suppliers, and other ecosystem participants. NVIDIA Corporation was incorporated in 1993 and is headquartered in Santa Clara, California.

About Onto Innovation

Onto Innovation Inc. engages in the design, development, manufacture, and support of process control tools that performs optical metrology. The company offers lithography systems and process control analytical software. It also offers process and yield management solutions, and device packaging and test facilities through standalone systems for optical metrology, macro-defect inspection, packaging lithography, and transparent and opaque thin film measurements. In addition, the company provides process control software portfolio that includes solutions for standalone tools, groups of tools, and enterprise-or factory-wide suites. Further, it engages in systems software, spare parts, and other services, as well as offers software licensing services. The company's products are used in semiconductor and advanced packaging device manufacturers; silicon wafer; light emitting diode; vertical-cavity surface-emitting laser; micro-electromechanical system; CMOS image sensor; power device; analog device; RF filter; data storage; and various industrial and scientific applications. Onto Innovation Inc. was founded in 1940 and is headquartered in Wilmington, Massachusetts.