In today's rapidly changing and fiercely competitive business landscape, it is vital for investors and industry enthusiasts to carefully evaluate companies. In this article, we will perform a comprehensive industry comparison, evaluating NVIDIA (NASDAQ:NVDA) against its key competitors in the Semiconductors & Semiconductor Equipment industry. By analyzing important financial metrics, market position, and growth prospects, we aim 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 | 45.76 | 37.79 | 24.28 | 29.14% | $38.75 | $41.85 | 62.49% |
| Taiwan Semiconductor Manufacturing Co Ltd | 33.61 | 10.57 | 14.55 | 9.44% | $691.11 | $588.54 | 30.31% |
| Broadcom Inc | 72.32 | 20.12 | 26.20 | 11.02% | $9.86 | $12.25 | 28.18% |
| Micron Technology Inc | 32.80 | 6.60 | 9.21 | 9.28% | $8.35 | $7.65 | 56.65% |
| Advanced Micro Devices Inc | 106.37 | 5.44 | 10.36 | 2.06% | $2.11 | $4.78 | 35.59% |
| Intel Corp | 759.17 | 2.04 | 3.75 | 3.98% | $7.85 | $5.22 | 2.78% |
| Qualcomm Inc | 35.49 | 8.98 | 4.44 | -12.88% | $3.51 | $6.24 | 10.03% |
| Texas Instruments Inc | 34.66 | 10.40 | 10.09 | 8.21% | $2.24 | $2.72 | 14.24% |
| Analog Devices Inc | 65.99 | 4.36 | 13.56 | 2.32% | $1.47 | $1.94 | 25.91% |
| ARM Holdings PLC | 143.32 | 16.01 | 27.01 | 3.3% | $0.22 | $1.11 | 34.48% |
| Marvell Technology Inc | 29.30 | 5.02 | 9.28 | 13.84% | $2.58 | $1.07 | 36.83% |
| NXP Semiconductors NV | 29.81 | 6.04 | 5.10 | 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 | 35.83 | 3.82 | 1.95 | 3.56% | $32.4 | $28.88 | 5.29% |
| Credo Technology Group Holding Ltd | 129.67 | 21.13 | 36.09 | 7.99% | $0.09 | $0.18 | 272.08% |
| ON Semiconductor Corp | 85.15 | 3.16 | 4.20 | 3.22% | $0.44 | $0.59 | -11.98% |
| STMicroelectronics NV | 49.72 | 1.43 | 2.27 | 1.33% | $0.31 | $1.06 | -1.97% |
| First Solar Inc | 18.32 | 2.84 | 5.08 | 5.19% | $0.61 | $0.61 | 79.67% |
| United Microelectronics Corp | 16.37 | 1.93 | 2.90 | 4.29% | $30.07 | $17.62 | -2.25% |
| Tower Semiconductor Ltd | 69.38 | 4.74 | 8.99 | 1.9% | $0.13 | $0.09 | 6.79% |
| Lattice Semiconductor Corp | 424 | 16.42 | 23.68 | 0.4% | $0.01 | $0.09 | 4.92% |
| Rambus Inc | 44.47 | 7.80 | 14.97 | 3.84% | $0.08 | $0.14 | 22.68% |
| Average | 106.68 | 8.18 | 11.95 | 4.47% | $37.85 | $32.52 | 31.75% |
By conducting a comprehensive analysis of NVIDIA, the following trends become evident:
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The Price to Earnings ratio of 45.76 is 0.43x lower than the industry average, indicating potential undervaluation for the stock.
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It could be trading at a premium in relation to its book value, as indicated by its Price to Book ratio of 37.79 which exceeds the industry average by 4.62x.
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The stock's relatively high Price to Sales ratio of 24.28, surpassing the industry average by 2.03x, 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 29.14%, which is 24.67% 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 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 is experiencing remarkable revenue growth, with a rate of 62.49%, outperforming the industry average of 31.75%.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio is a measure that indicates the level of debt a company has taken on relative to the value of its assets net of liabilities.
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 examining NVIDIA in comparison to its top 4 peers with respect to the Debt-to-Equity ratio, the following information becomes apparent:
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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 0.09.
Key Takeaways
For NVIDIA in the Semiconductors & Semiconductor Equipment industry, the PE ratio is low compared to peers, indicating potential undervaluation. The PB and PS ratios are high, suggesting overvaluation relative to industry standards. In terms of ROE, EBITDA, gross profit, and revenue growth, NVIDIA outperforms its peers, reflecting strong financial performance and growth potential within the industry sector.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
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