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 | 44.01 | 36.35 | 23.36 | 28.72% | $31.94 | $33.85 | 55.6% |
| Broadcom Inc | 98.73 | 24.81 | 31.08 | 5.8% | $8.29 | $10.7 | 22.03% |
| Taiwan Semiconductor Manufacturing Co Ltd | 29.54 | 9.29 | 12.79 | 9.44% | $691.11 | $588.54 | 30.31% |
| Advanced Micro Devices Inc | 107.92 | 5.52 | 10.51 | 2.06% | $2.11 | $4.78 | 35.59% |
| Micron Technology Inc | 29.58 | 4.65 | 6.76 | 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 | 597.17 | 1.61 | 2.95 | 3.98% | $7.85 | $5.22 | 2.78% |
| Texas Instruments Inc | 29.47 | 8.84 | 8.58 | 8.21% | $2.24 | $2.72 | 14.24% |
| ARM Holdings PLC | 168.51 | 18.83 | 31.76 | 3.3% | $0.22 | $1.11 | 34.48% |
| Analog Devices Inc | 55.27 | 3.65 | 11.36 | 1.5% | $1.33 | $1.79 | 24.57% |
| NXP Semiconductors NV | 23.61 | 4.79 | 4.04 | 6.43% | $1.11 | $1.79 | -2.37% |
| Monolithic Power Systems Inc | 23.31 | 12.20 | 16.44 | 5.12% | $0.21 | $0.41 | 18.88% |
| ASE Technology Holding Co Ltd | 28.78 | 3.07 | 1.56 | 3.56% | $32.4 | $28.88 | 5.29% |
| First Solar Inc | 19.98 | 3.10 | 5.54 | 5.19% | $0.61 | $0.61 | 79.67% |
| Credo Technology Group Holding Ltd | 214.14 | 34.14 | 47.79 | 8.67% | $0.07 | $0.15 | 273.57% |
| ON Semiconductor Corp | 66.18 | 2.46 | 3.26 | 3.22% | $0.38 | $0.55 | 5.6% |
| STMicroelectronics NV | 38.72 | 1.12 | 1.77 | 1.33% | $0.31 | $1.06 | -1.97% |
| United Microelectronics Corp | 13.53 | 1.59 | 2.39 | 4.29% | $30.07 | $17.62 | -2.25% |
| Tower Semiconductor Ltd | 56.65 | 3.86 | 7.34 | 1.9% | $0.13 | $0.09 | 6.79% |
| Rambus Inc | 44.02 | 7.72 | 14.82 | 3.84% | $0.08 | $0.14 | 22.68% |
| Skyworks Solutions Inc | 20.62 | 1.64 | 2.41 | 2.48% | $0.25 | $0.45 | 7.34% |
| Average | 84.92 | 8.06 | 11.36 | 3.68% | $39.41 | $33.89 | 31.66% |
After thoroughly examining NVIDIA, the following trends can be inferred:
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The stock's Price to Earnings ratio of 44.01 is lower than the industry average by 0.52x, suggesting potential value in the eyes of market participants.
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The elevated Price to Book ratio of 36.35 relative to the industry average by 4.51x suggests company might be overvalued based on its book value.
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The stock's relatively high Price to Sales ratio of 23.36, surpassing the industry average by 2.06x, may indicate an aspect of overvaluation in terms of sales performance.
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The Return on Equity (ROE) of 28.72% is 25.04% above the industry average, highlighting 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 0.81x below the industry average, suggesting potential lower profitability or financial challenges.
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Compared to its industry, the company has lower gross profit of $33.85 Billion, which indicates 1.0x below the industry average, potentially indicating 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 31.66%, showcasing exceptional sales performance and strong demand for its products or services.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio is a key indicator of a company's financial health and its reliance on debt financing.
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.
By evaluating NVIDIA against its top 4 peers in terms of the Debt-to-Equity ratio, the following observations 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 the market values the company's assets and sales highly. In terms of ROE, NVIDIA outperforms peers, reflecting strong profitability. However, the low EBITDA and gross profit indicate lower operational efficiency. The high revenue growth signifies a positive outlook for the company's future performance compared to industry peers.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
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