In the ever-changing and fiercely competitive business landscape, conducting thorough company analysis is crucial for investors and industry experts. In this article, we will undertake a comprehensive industry comparison, evaluating NVIDIA (NASDAQ:NVDA) and its primary competitors in the Semiconductors & Semiconductor Equipment industry. By closely examining key financial metrics, market position, and growth prospects, our aim is to provide valuable insights for investors and shed light on company's performance within the industry.
NVIDIA Background
Nvidia is a leading developer of graphics processing units. Traditionally, GPUs were used to enhance the experience on computing platforms, most notably in gaming applications on PCs. GPU use cases have since emerged as important semiconductors used in artificial intelligence to run large language models. Nvidia not only offers AI GPUs, but also a software platform, Cuda, used for AI model development and training. Nvidia is also expanding its data center networking solutions, helping to tie GPUs together to handle complex workloads.
| Company | P/E | P/B | P/S | ROE | EBITDA (in billions) | Gross Profit (in billions) | Revenue Growth |
|---|---|---|---|---|---|---|---|
| NVIDIA Corp | 44.28 | 36.57 | 23.50 | 28.72% | $31.94 | $33.85 | 55.6% |
| Broadcom Inc | 87.23 | 21.92 | 27.46 | 5.8% | $8.29 | $10.7 | 22.03% |
| Taiwan Semiconductor Manufacturing Co Ltd | 28.33 | 8.91 | 12.26 | 9.44% | $691.11 | $588.54 | 30.31% |
| Advanced Micro Devices Inc | 106.69 | 5.46 | 10.39 | 2.06% | $2.11 | $4.78 | 35.59% |
| Micron Technology Inc | 27.32 | 4.30 | 6.24 | 6.1% | $5.9 | $5.05 | 46.0% |
| Qualcomm Inc | 32.59 | 8.25 | 4.07 | -12.88% | $3.51 | $6.24 | 10.03% |
| Intel Corp | 575 | 1.55 | 2.84 | 3.98% | $7.85 | $5.22 | 2.78% |
| Texas Instruments Inc | 29.03 | 8.71 | 8.45 | 8.21% | $2.24 | $2.72 | 14.24% |
| ARM Holdings PLC | 168.68 | 18.85 | 31.79 | 3.3% | $0.22 | $1.11 | 34.48% |
| Analog Devices Inc | 59.11 | 3.35 | 11.14 | 1.5% | $1.33 | $1.79 | 24.57% |
| Monolithic Power Systems Inc | 22.38 | 11.71 | 15.78 | 5.12% | $0.21 | $0.41 | 18.88% |
| ASE Technology Holding Co Ltd | 27.83 | 2.97 | 1.51 | 3.56% | $32.4 | $28.88 | 5.29% |
| First Solar Inc | 19.18 | 2.97 | 5.32 | 5.19% | $0.61 | $0.61 | 79.67% |
| Credo Technology Group Holding Ltd | 185.40 | 29.55 | 41.38 | 8.67% | $0.07 | $0.15 | 273.57% |
| STMicroelectronics NV | 37.88 | 1.09 | 1.73 | 1.33% | $0.31 | $1.06 | -1.97% |
| ON Semiconductor Corp | 63.97 | 2.38 | 3.16 | 3.22% | $0.38 | $0.55 | 5.6% |
| United Microelectronics Corp | 13.37 | 1.57 | 2.37 | 4.29% | $30.07 | $17.62 | -2.25% |
| Rambus Inc | 41.97 | 7.36 | 14.13 | 3.84% | $0.08 | $0.14 | 22.68% |
| Skyworks Solutions Inc | 20.33 | 1.62 | 2.38 | 2.48% | $0.25 | $0.45 | 7.34% |
| Lattice Semiconductor Corp | 336.30 | 13.02 | 18.78 | 0.4% | $0.01 | $0.09 | 4.92% |
| Average | 99.08 | 8.19 | 11.64 | 3.45% | $41.42 | $35.58 | 33.36% |
Through an analysis of NVIDIA, we can infer the following trends:
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The stock's Price to Earnings ratio of 44.28 is lower than the industry average by 0.45x, suggesting potential value in the eyes of market participants.
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With a Price to Book ratio of 36.57, which is 4.47x the industry average, NVIDIA might be considered overvalued in terms of its book value, as it is trading at a higher multiple compared to its industry peers.
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With a relatively high Price to Sales ratio of 23.5, which is 2.02x the industry average, the stock might be considered overvalued based on sales performance.
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With a Return on Equity (ROE) of 28.72% that is 25.27% above the industry average, it appears that the company exhibits efficient use of equity to generate profits.
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The Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $31.94 Billion is 0.77x below the industry average, suggesting potential lower profitability or financial challenges.
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The gross profit of $33.85 Billion is 0.95x below that of its industry, suggesting potential lower revenue after accounting for production costs.
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The company's revenue growth of 55.6% is notably higher compared to the industry average of 33.36%, showcasing exceptional sales performance and strong demand for its products or services.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio is an important measure to assess the financial structure and risk profile of a company.
Considering the debt-to-equity ratio in industry comparisons allows for a concise evaluation of a company's financial health and risk profile, aiding in informed decision-making.
In terms of the Debt-to-Equity ratio, NVIDIA stands in comparison with its top 4 peers, leading to the following comparisons:
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When considering the debt-to-equity ratio, NVIDIA exhibits a stronger financial position compared to its top 4 peers.
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This indicates that the company has a favorable balance between debt and equity, with a lower debt-to-equity ratio of 0.11, which can be perceived as a positive aspect by investors.
Key Takeaways
The low P/E ratio suggests that NVIDIA may be undervalued compared to its peers in the Semiconductors & Semiconductor Equipment industry. However, the high P/B and P/S ratios indicate that the stock may be overvalued based on its book value and sales. On the other hand, the high ROE, low EBITDA, low gross profit, and high revenue growth point towards strong profitability and growth potential for NVIDIA compared to its industry counterparts.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
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