In today's rapidly evolving and fiercely competitive business landscape, it is crucial for investors and industry analysts to conduct comprehensive company evaluations. In this article, we will undertake an in-depth industry comparison, assessing NVIDIA (NASDAQ:NVDA) alongside its primary competitors in the Semiconductors & Semiconductor Equipment industry. By meticulously examining crucial financial indicators, market positioning, and growth potential, we aim to provide valuable insights to 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 | 45.19 | 37.32 | 23.98 | 28.72% | $31.94 | $33.85 | 55.6% |
| Broadcom Inc | 96.91 | 24.36 | 30.51 | 5.8% | $8.29 | $10.7 | 22.03% |
| Taiwan Semiconductor Manufacturing Co Ltd | 29.46 | 9.27 | 12.75 | 9.44% | $691.11 | $588.54 | 30.31% |
| Advanced Micro Devices Inc | 112.59 | 5.76 | 10.96 | 2.06% | $2.11 | $4.78 | 35.59% |
| Micron Technology Inc | 29.50 | 4.64 | 6.74 | 6.1% | $5.9 | $5.05 | 46.0% |
| Qualcomm Inc | 32.95 | 8.34 | 4.12 | -12.88% | $3.51 | $6.24 | 10.03% |
| Intel Corp | 596.50 | 1.60 | 2.95 | 3.98% | $7.85 | $5.22 | 2.78% |
| Texas Instruments Inc | 29.37 | 8.81 | 8.55 | 8.21% | $2.24 | $2.72 | 14.24% |
| ARM Holdings PLC | 172.71 | 19.30 | 32.55 | 3.3% | $0.22 | $1.11 | 34.48% |
| Analog Devices Inc | 60.92 | 3.46 | 11.48 | 1.5% | $1.33 | $1.79 | 24.57% |
| NXP Semiconductors NV | 23.68 | 4.80 | 4.05 | 6.43% | $1.11 | $1.79 | -2.37% |
| Monolithic Power Systems Inc | 22.91 | 11.99 | 16.16 | 5.12% | $0.21 | $0.41 | 18.88% |
| ASE Technology Holding Co Ltd | 28.66 | 3.06 | 1.56 | 3.56% | $32.4 | $28.88 | 5.29% |
| First Solar Inc | 19.94 | 3.09 | 5.53 | 5.19% | $0.61 | $0.61 | 79.67% |
| Credo Technology Group Holding Ltd | 209.51 | 33.40 | 46.76 | 8.67% | $0.07 | $0.15 | 273.57% |
| ON Semiconductor Corp | 64.92 | 2.41 | 3.20 | 3.22% | $0.38 | $0.55 | 5.6% |
| STMicroelectronics NV | 38.07 | 1.10 | 1.74 | 1.33% | $0.31 | $1.06 | -1.97% |
| United Microelectronics Corp | 13.81 | 1.62 | 2.44 | 4.29% | $30.07 | $17.62 | -2.25% |
| Tower Semiconductor Ltd | 55.52 | 3.78 | 7.19 | 1.9% | $0.13 | $0.09 | 6.79% |
| Rambus Inc | 44.11 | 7.74 | 14.85 | 3.84% | $0.08 | $0.14 | 22.68% |
| Skyworks Solutions Inc | 20.47 | 1.63 | 2.39 | 2.48% | $0.25 | $0.45 | 7.34% |
| Average | 85.13 | 8.01 | 11.32 | 3.68% | $39.41 | $33.89 | 31.66% |
Upon a comprehensive analysis of NVIDIA, the following trends can be discerned:
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At 45.19, the stock's Price to Earnings ratio is 0.53x less than the industry average, suggesting favorable growth potential.
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With a Price to Book ratio of 37.32, which is 4.66x 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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The stock's relatively high Price to Sales ratio of 23.98, surpassing the industry average by 2.12x, may indicate an aspect of overvaluation in terms of sales performance.
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The company has a higher Return on Equity (ROE) of 28.72%, which is 25.04% above the industry average. This suggests efficient use of equity to generate profits and demonstrates profitability and growth potential.
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The company has lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $31.94 Billion, which is 0.81x below the industry average. This potentially indicates lower profitability or financial challenges.
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With lower gross profit of $33.85 Billion, which indicates 1.0x below the industry average, the company may experience lower revenue after accounting for production costs.
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With a revenue growth of 55.6%, which surpasses the industry average of 31.66%, the company is demonstrating robust sales expansion and gaining market share.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio indicates the proportion of debt and equity used by a company to finance its assets and operations.
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.
When evaluating NVIDIA alongside its top 4 peers in terms of the Debt-to-Equity ratio, the following insights arise:
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In terms of the debt-to-equity ratio, NVIDIA has a lower level of debt compared to its top 4 peers, indicating a stronger financial position.
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This implies that the company relies less on debt financing and has a more favorable balance between debt and equity with a lower debt-to-equity ratio of 0.11.
Key Takeaways
For NVIDIA in the Semiconductors & Semiconductor Equipment industry, the PE ratio is low compared to peers, indicating potential undervaluation. The high PB and PS ratios suggest strong market sentiment and revenue multiples. In terms of ROE, NVIDIA outperforms peers, reflecting efficient use of shareholder equity. However, the low EBITDA and gross profit levels may indicate operational challenges. The high revenue growth rate highlights NVIDIA's strong sales performance relative to industry competitors.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
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