Amidst today's fast-paced and highly competitive business environment, it is crucial for investors and industry enthusiasts to conduct comprehensive company evaluations. In this article, we will delve into an extensive industry comparison, evaluating NVIDIA (NASDAQ:NVDA) in comparison to its major competitors within the Semiconductors & Semiconductor Equipment industry. By analyzing critical 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 | 45.99 | 37.98 | 24.41 | 29.14% | $38.75 | $41.85 | 62.49% |
| Taiwan Semiconductor Manufacturing Co Ltd | 34.53 | 10.86 | 14.95 | 9.44% | $691.11 | $588.54 | 30.31% |
| Broadcom Inc | 74.34 | 20.68 | 26.94 | 11.02% | $9.86 | $12.25 | 28.18% |
| Micron Technology Inc | 32.14 | 6.47 | 9.02 | 9.28% | $8.35 | $7.65 | 56.65% |
| Advanced Micro Devices Inc | 115.69 | 5.92 | 11.26 | 2.06% | $2.11 | $4.78 | 35.59% |
| Intel Corp | 788.17 | 2.12 | 3.90 | 3.98% | $7.85 | $5.22 | 2.78% |
| Qualcomm Inc | 32.99 | 8.35 | 4.12 | -12.88% | $3.51 | $6.24 | 10.03% |
| Texas Instruments Inc | 34.34 | 10.30 | 9.99 | 8.21% | $2.24 | $2.72 | 14.24% |
| Analog Devices Inc | 64.96 | 4.29 | 13.35 | 2.32% | $1.47 | $1.94 | 25.91% |
| ARM Holdings PLC | 138.26 | 15.45 | 26.06 | 3.3% | $0.22 | $1.11 | 34.48% |
| Marvell Technology Inc | 29.24 | 5.01 | 9.26 | 13.84% | $2.58 | $1.07 | 36.83% |
| NXP Semiconductors NV | 29.55 | 5.99 | 5.06 | 6.43% | $1.11 | $1.79 | -2.37% |
| Monolithic Power Systems Inc | 25.23 | 13.20 | 17.79 | 5.12% | $0.21 | $0.41 | 18.88% |
| ASE Technology Holding Co Ltd | 38.12 | 4.07 | 2.07 | 3.56% | $32.4 | $28.88 | 5.29% |
| Credo Technology Group Holding Ltd | 139.12 | 22.67 | 38.72 | 7.99% | $0.09 | $0.18 | 272.08% |
| First Solar Inc | 18.52 | 2.87 | 5.14 | 5.19% | $0.61 | $0.61 | 79.67% |
| STMicroelectronics NV | 49.02 | 1.41 | 2.24 | 1.33% | $0.31 | $1.06 | -1.97% |
| ON Semiconductor Corp | 81.38 | 3.02 | 4.01 | 3.22% | $0.44 | $0.59 | -11.98% |
| United Microelectronics Corp | 16.19 | 1.91 | 2.87 | 4.29% | $30.07 | $17.62 | -2.25% |
| Tower Semiconductor Ltd | 72.13 | 4.93 | 9.34 | 1.9% | $0.13 | $0.09 | 6.79% |
| Lattice Semiconductor Corp | 431.50 | 16.71 | 24.09 | 0.4% | $0.01 | $0.09 | 4.92% |
| Rambus Inc | 45.47 | 7.98 | 15.31 | 3.84% | $0.08 | $0.14 | 22.68% |
| Average | 109.09 | 8.3 | 12.17 | 4.47% | $37.85 | $32.52 | 31.75% |
Through a thorough examination of NVIDIA, we can discern the following trends:
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With a Price to Earnings ratio of 45.99, which is 0.42x less than the industry average, the stock shows potential for growth at a reasonable price, making it an interesting consideration for market participants.
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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 37.98 which exceeds the industry average by 4.58x.
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The stock's relatively high Price to Sales ratio of 24.41, surpassing the industry average by 2.01x, 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 Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $38.75 Billion is 1.02x above the industry average, highlighting stronger profitability and robust cash flow generation.
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The gross profit of $41.85 Billion is 1.29x above that of its industry, highlighting stronger profitability and higher earnings from its core operations.
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With a revenue growth of 62.49%, which surpasses the industry average of 31.75%, the company is demonstrating robust sales expansion and gaining market share.
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 analyzing NVIDIA in relation to its top 4 peers based on the Debt-to-Equity ratio, the following insights can be derived:
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Among its top 4 peers, NVIDIA has a stronger financial position with a lower debt-to-equity ratio of 0.09.
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This indicates that the company relies less on debt financing and maintains a more favorable balance between debt and equity, which can be viewed positively by investors.
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 sector.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
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