In the dynamic and fiercely competitive business environment, conducting a thorough analysis of companies is crucial for investors and industry enthusiasts. In this article, we will perform an extensive industry comparison, evaluating NVIDIA (NASDAQ:NVDA) in relation to its major competitors in the Semiconductors & Semiconductor Equipment industry. By closely examining crucial financial metrics, market position, and growth prospects, we aim to offer 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 | 45.78 | 37.81 | 24.29 | 29.14% | $38.75 | $41.85 | 62.49% |
| Taiwan Semiconductor Manufacturing Co Ltd | 34.61 | 10.89 | 14.98 | 9.44% | $691.11 | $588.54 | 30.31% |
| Broadcom Inc | 73.84 | 20.54 | 26.75 | 11.02% | $9.86 | $12.25 | 28.18% |
| Micron Technology Inc | 32.88 | 6.62 | 9.23 | 9.28% | $8.35 | $7.65 | 56.65% |
| Advanced Micro Devices Inc | 108.74 | 5.56 | 10.59 | 2.06% | $2.11 | $4.78 | 35.59% |
| Intel Corp | 734.33 | 1.98 | 3.63 | 3.98% | $7.85 | $5.22 | 2.78% |
| Qualcomm Inc | 33.79 | 8.55 | 4.22 | -12.88% | $3.51 | $6.24 | 10.03% |
| Texas Instruments Inc | 34.44 | 10.33 | 10.02 | 8.21% | $2.24 | $2.72 | 14.24% |
| Analog Devices Inc | 64.44 | 4.26 | 13.25 | 2.32% | $1.47 | $1.94 | 25.91% |
| ARM Holdings PLC | 142.49 | 15.92 | 26.85 | 3.3% | $0.22 | $1.11 | 34.48% |
| Marvell Technology Inc | 29.19 | 5 | 9.24 | 13.84% | $2.58 | $1.07 | 36.83% |
| NXP Semiconductors NV | 29.46 | 5.97 | 5.04 | 6.43% | $1.11 | $1.79 | -2.37% |
| Monolithic Power Systems Inc | 24.81 | 12.99 | 17.50 | 5.12% | $0.21 | $0.41 | 18.88% |
| ASE Technology Holding Co Ltd | 37.27 | 3.98 | 2.02 | 3.56% | $32.4 | $28.88 | 5.29% |
| Credo Technology Group Holding Ltd | 134.54 | 21.92 | 37.44 | 7.99% | $0.09 | $0.18 | 272.08% |
| First Solar Inc | 18.25 | 2.83 | 5.06 | 5.19% | $0.61 | $0.61 | 79.67% |
| STMicroelectronics NV | 48.88 | 1.41 | 2.24 | 1.33% | $0.31 | $1.06 | -1.97% |
| ON Semiconductor Corp | 80.48 | 2.99 | 3.97 | 3.22% | $0.44 | $0.59 | -11.98% |
| United Microelectronics Corp | 16.56 | 1.95 | 2.93 | 4.29% | $30.07 | $17.62 | -2.25% |
| Tower Semiconductor Ltd | 70.12 | 4.79 | 9.08 | 1.9% | $0.13 | $0.09 | 6.79% |
| Lattice Semiconductor Corp | 415.50 | 16.09 | 23.20 | 0.4% | $0.01 | $0.09 | 4.92% |
| Rambus Inc | 44.24 | 7.76 | 14.89 | 3.84% | $0.08 | $0.14 | 22.68% |
| Average | 105.18 | 8.21 | 12.01 | 4.47% | $37.85 | $32.52 | 31.75% |
Upon closer analysis of NVIDIA, the following trends become apparent:
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The stock's Price to Earnings ratio of 45.78 is lower than the industry average by 0.44x, suggesting potential value in the eyes of market participants.
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With a Price to Book ratio of 37.81, which is 4.61x 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 24.29, surpassing the industry average by 2.02x, 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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With higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $38.75 Billion, which is 1.02x above the industry average, the company demonstrates 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 assessing NVIDIA against its top 4 peers using the Debt-to-Equity ratio, the following comparisons can be made:
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When comparing the debt-to-equity ratio, NVIDIA is in a stronger financial position compared to its top 4 peers.
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The company has a lower level of debt relative to its equity, indicating a more favorable balance between the two 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 high PB and PS ratios suggest strong market sentiment and revenue multiples. In terms of ROE, EBITDA, gross profit, and revenue growth, NVIDIA outperforms its industry peers, reflecting strong financial performance and growth prospects.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
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