In today's fast-paced and highly competitive business world, it is crucial for investors and industry followers to conduct comprehensive company evaluations. In this article, we will delve into an extensive industry comparison, evaluating NVIDIA (NASDAQ:NVDA) in relation to its major competitors in the Semiconductors & Semiconductor Equipment industry. By closely examining key financial metrics, market standing, and growth prospects, our objective is to provide valuable insights and highlight 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 | 45.33 | 37.44 | 24.06 | 29.14% | $38.75 | $41.85 | 62.49% |
| Taiwan Semiconductor Manufacturing Co Ltd | 34.15 | 10.74 | 14.78 | 9.44% | $691.11 | $588.54 | 30.31% |
| Broadcom Inc | 71.26 | 19.82 | 25.82 | 11.02% | $9.86 | $12.25 | 28.18% |
| Micron Technology Inc | 31.69 | 6.38 | 8.89 | 9.28% | $8.35 | $7.65 | 56.65% |
| Advanced Micro Devices Inc | 117.07 | 5.99 | 11.40 | 2.06% | $2.11 | $4.78 | 35.59% |
| Intel Corp | 812 | 2.18 | 4.02 | 3.98% | $7.85 | $5.22 | 2.78% |
| Qualcomm Inc | 32.84 | 8.31 | 4.11 | -12.88% | $3.51 | $6.24 | 10.03% |
| Texas Instruments Inc | 35.24 | 10.57 | 10.25 | 8.21% | $2.24 | $2.72 | 14.24% |
| Analog Devices Inc | 65.35 | 4.31 | 13.43 | 2.32% | $1.47 | $1.94 | 25.91% |
| ARM Holdings PLC | 134.60 | 15.04 | 25.37 | 3.3% | $0.22 | $1.11 | 34.48% |
| Marvell Technology Inc | 28.60 | 4.90 | 9.05 | 13.84% | $2.58 | $1.07 | 36.83% |
| NXP Semiconductors NV | 29.77 | 6.03 | 5.09 | 6.43% | $1.11 | $1.79 | -2.37% |
| Monolithic Power Systems Inc | 25.23 | 13.21 | 17.80 | 5.12% | $0.21 | $0.41 | 18.88% |
| ASE Technology Holding Co Ltd | 38.55 | 4.11 | 2.09 | 3.56% | $32.4 | $28.88 | 5.29% |
| Credo Technology Group Holding Ltd | 135.21 | 22.03 | 37.63 | 7.99% | $0.09 | $0.18 | 272.08% |
| First Solar Inc | 18.15 | 2.81 | 5.03 | 5.19% | $0.61 | $0.61 | 79.67% |
| ON Semiconductor Corp | 82.99 | 3.08 | 4.09 | 3.22% | $0.44 | $0.59 | -11.98% |
| STMicroelectronics NV | 48.07 | 1.39 | 2.20 | 1.33% | $0.31 | $1.06 | -1.97% |
| United Microelectronics Corp | 16.46 | 1.94 | 2.91 | 4.29% | $30.07 | $17.62 | -2.25% |
| Tower Semiconductor Ltd | 71.22 | 4.87 | 9.23 | 1.9% | $0.13 | $0.09 | 6.79% |
| Lattice Semiconductor Corp | 426.20 | 16.51 | 23.80 | 0.4% | $0.01 | $0.09 | 4.92% |
| Rambus Inc | 47.91 | 8.41 | 16.13 | 3.84% | $0.08 | $0.14 | 22.68% |
| Average | 109.65 | 8.22 | 12.05 | 4.47% | $37.85 | $32.52 | 31.75% |
Through a meticulous analysis of NVIDIA, we can observe the following trends:
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A Price to Earnings ratio of 45.33 significantly below the industry average by 0.41x suggests undervaluation. This can make the stock appealing for those seeking growth.
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The elevated Price to Book ratio of 37.44 relative to the industry average by 4.55x suggests company might be overvalued based on its book value.
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With a relatively high Price to Sales ratio of 24.06, which is 2.0x 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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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 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 demonstrates a stronger financial position compared to its top 4 peers in the sector.
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With a lower debt-to-equity ratio of 0.09, the company relies less on debt financing and maintains a healthier balance between debt and equity, which can be viewed positively by 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. In terms of ROE, EBITDA, gross profit, and revenue growth, NVIDIA outperforms industry peers, reflecting robust financial performance and growth prospects.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
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