In the fast-paced and cutthroat world of business, conducting thorough company analysis is essential for investors and industry experts. In this article, we will undertake a comprehensive industry comparison, evaluating NVIDIA (NASDAQ:NVDA) in comparison to its major competitors within the Semiconductors & Semiconductor Equipment industry. By analyzing crucial financial metrics, market position, and growth potential, our objective is to provide valuable insights for investors and offer a deeper understanding of company's performance in 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 | 45.80 | 37.83 | 24.31 | 29.14% | $38.75 | $41.85 | 62.49% |
| Taiwan Semiconductor Manufacturing Co Ltd | 33.03 | 10.39 | 14.30 | 9.44% | $691.11 | $588.54 | 30.31% |
| Broadcom Inc | 69.70 | 19.39 | 25.26 | 11.02% | $9.86 | $12.25 | 28.18% |
| Micron Technology Inc | 31.09 | 6.26 | 8.73 | 9.28% | $8.35 | $7.65 | 56.65% |
| Advanced Micro Devices Inc | 107.16 | 5.48 | 10.43 | 2.06% | $2.11 | $4.78 | 35.59% |
| Intel Corp | 685.17 | 1.84 | 3.39 | 3.98% | $7.85 | $5.22 | 2.78% |
| Qualcomm Inc | 36.30 | 9.19 | 4.54 | -12.88% | $3.51 | $6.24 | 10.03% |
| Texas Instruments Inc | 34.33 | 10.30 | 9.99 | 8.21% | $2.24 | $2.72 | 14.24% |
| Analog Devices Inc | 65.61 | 4.33 | 13.48 | 2.32% | $1.47 | $1.94 | 25.91% |
| ARM Holdings PLC | 144.97 | 16.20 | 27.32 | 3.3% | $0.22 | $1.11 | 34.48% |
| Marvell Technology Inc | 29.38 | 5.03 | 9.30 | 13.84% | $2.58 | $1.07 | 36.83% |
| NXP Semiconductors NV | 29.41 | 5.96 | 5.03 | 6.43% | $1.11 | $1.79 | -2.37% |
| Monolithic Power Systems Inc | 24.60 | 12.88 | 17.35 | 5.12% | $0.21 | $0.41 | 18.88% |
| ASE Technology Holding Co Ltd | 35.20 | 3.75 | 1.91 | 3.56% | $32.4 | $28.88 | 5.29% |
| First Solar Inc | 18.90 | 2.93 | 5.24 | 5.19% | $0.61 | $0.61 | 79.67% |
| ON Semiconductor Corp | 83.41 | 3.10 | 4.11 | 3.22% | $0.44 | $0.59 | -11.98% |
| STMicroelectronics NV | 48.34 | 1.40 | 2.21 | 1.33% | $0.31 | $1.06 | -1.97% |
| Credo Technology Group Holding Ltd | 122.06 | 19.89 | 33.97 | 7.99% | $0.09 | $0.18 | 272.08% |
| United Microelectronics Corp | 15.93 | 1.88 | 2.82 | 4.29% | $30.07 | $17.62 | -2.25% |
| Tower Semiconductor Ltd | 67.82 | 4.64 | 8.78 | 1.9% | $0.13 | $0.09 | 6.79% |
| Lattice Semiconductor Corp | 411.05 | 15.92 | 22.95 | 0.4% | $0.01 | $0.09 | 4.92% |
| Rambus Inc | 43.50 | 7.63 | 14.64 | 3.84% | $0.08 | $0.14 | 22.68% |
| Average | 101.76 | 8.02 | 11.7 | 4.47% | $37.85 | $32.52 | 31.75% |
After examining NVIDIA, the following trends can be inferred:
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At 45.8, the stock's Price to Earnings ratio is 0.45x less than the industry average, suggesting favorable growth potential.
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With a Price to Book ratio of 37.83, which is 4.72x 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 24.31, which is 2.08x the industry average, the stock might be considered overvalued based on sales performance.
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With a Return on Equity (ROE) of 29.14% that is 24.67% above the industry average, it appears that the company exhibits efficient use of equity to generate profits.
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Compared to its industry, the company has higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $38.75 Billion, which is 1.02x above the industry average, indicating stronger profitability and robust cash flow generation.
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Compared to its industry, the company has higher gross profit of $41.85 Billion, which indicates 1.29x above the industry average, indicating stronger profitability and higher earnings from its core operations.
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The company's revenue growth of 62.49% is notably higher compared to the industry average of 31.75%, 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 financial metric that helps determine the level of financial risk associated with a company's capital structure.
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 considering the Debt-to-Equity ratio, NVIDIA can be compared to its top 4 peers, leading to the following observations:
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NVIDIA exhibits a stronger financial position compared to its top 4 peers in the sector, as indicated by its lower debt-to-equity ratio of 0.09.
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This suggests that the company has a more favorable balance between debt and equity, which can be seen as a positive aspect for investors.
Key Takeaways
For NVIDIA, the PE ratio is low compared to peers, indicating potential undervaluation. The high PB and PS ratios suggest strong market sentiment and revenue multiples. A high ROE reflects efficient use of shareholder equity, while high EBITDA and gross profit signify robust operational performance. The high revenue growth indicates strong sales momentum within the Semiconductors & Semiconductor Equipment industry.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
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