In the ever-evolving and intensely competitive business landscape, conducting a thorough company analysis is of utmost importance for investors and industry followers. In this article, we will carry out an in-depth industry comparison, assessing NVIDIA (NASDAQ:NVDA) alongside its primary competitors in the Semiconductors & Semiconductor Equipment industry. By meticulously examining key financial metrics, market positioning, and growth prospects, we aim to offer valuable insights to 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 | 50.64 | 43.22 | 26.53 | 28.72% | $31.94 | $33.85 | 55.6% |
| Broadcom Inc | 93.36 | 23.46 | 29.39 | 5.8% | $8.29 | $10.7 | 22.03% |
| Taiwan Semiconductor Manufacturing Co Ltd | 28.45 | 8.97 | 12.08 | 8.71% | $684.78 | $547.37 | 38.65% |
| Advanced Micro Devices Inc | 96.50 | 4.38 | 8.89 | 1.48% | $0.72 | $3.06 | 31.71% |
| Micron Technology Inc | 28.43 | 3.48 | 5.28 | 3.79% | $4.33 | $3.51 | 36.56% |
| Qualcomm Inc | 15.56 | 6.39 | 4.16 | 9.71% | $3.52 | $5.76 | 10.35% |
| ARM Holdings PLC | 233.12 | 23.26 | 39.73 | 1.88% | $0.17 | $1.02 | 12.14% |
| Texas Instruments Inc | 32.58 | 9.88 | 9.80 | 7.85% | $2.09 | $2.58 | 16.38% |
| Analog Devices Inc | 62.32 | 3.53 | 11.74 | 1.5% | $1.33 | $1.79 | 24.57% |
| NXP Semiconductors NV | 26.13 | 5.78 | 4.62 | 4.71% | $0.92 | $1.56 | -6.43% |
| Monolithic Power Systems Inc | 22.23 | 11.96 | 16.16 | 4.01% | $0.18 | $0.37 | 30.97% |
| Credo Technology Group Holding Ltd | 227.75 | 36.30 | 50.83 | 8.67% | $0.07 | $0.15 | 273.57% |
| ASE Technology Holding Co Ltd | 22.58 | 2.51 | 1.20 | 2.49% | $26.99 | $25.69 | 7.5% |
| STMicroelectronics NV | 57.40 | 1.28 | 2.13 | -0.05% | $0.62 | $0.65 | -14.42% |
| First Solar Inc | 17.69 | 2.60 | 5.12 | 4.09% | $0.49 | $0.5 | 8.58% |
| ON Semiconductor Corp | 45.82 | 2.48 | 3.19 | 2.13% | $0.38 | $0.55 | -15.36% |
| United Microelectronics Corp | 12.44 | 1.55 | 2.16 | 2.45% | $24.98 | $16.88 | 3.45% |
| Skyworks Solutions Inc | 29.03 | 1.91 | 2.87 | 1.81% | $0.23 | $0.4 | 6.57% |
| Rambus Inc | 44.97 | 8.31 | 15.96 | 4.85% | $0.08 | $0.14 | 30.33% |
| Lattice Semiconductor Corp | 280.04 | 12.83 | 18.18 | 0.42% | $0.02 | $0.08 | -0.08% |
| Average | 72.44 | 8.99 | 12.82 | 4.02% | $40.01 | $32.78 | 27.21% |
By thoroughly analyzing NVIDIA, we can discern the following trends:
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A Price to Earnings ratio of 50.64 significantly below the industry average by 0.7x suggests undervaluation. This can make the stock appealing for those seeking growth.
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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 43.22 which exceeds the industry average by 4.81x.
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With a relatively high Price to Sales ratio of 26.53, which is 2.07x the industry average, the stock might be considered overvalued based on sales performance.
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With a Return on Equity (ROE) of 28.72% that is 24.7% above the industry average, it appears that the company exhibits efficient use of equity to generate profits.
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With lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $31.94 Billion, which is 0.8x below the industry average, the company may face lower profitability or financial challenges.
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Compared to its industry, the company has higher gross profit of $33.85 Billion, which indicates 1.03x above the industry average, indicating stronger profitability and higher earnings from its core operations.
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With a revenue growth of 55.6%, which surpasses the industry average of 27.21%, the company is demonstrating robust sales expansion and gaining market share.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio provides insights into the proportion of debt a company has in relation to its equity and asset value.
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 comparing NVIDIA with its top 4 peers based on the Debt-to-Equity ratio, the following insights can be observed:
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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 0.11.
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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. The high ROE reflects efficient use of shareholder equity, while the low EBITDA may indicate room for operational improvement. The high gross profit margin and revenue growth rate outperform industry peers, signaling strong financial health and growth potential.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
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