In today's rapidly changing and fiercely competitive business landscape, it is essential for investors and industry enthusiasts to thoroughly analyze companies. In this article, we will conduct a comprehensive industry comparison, evaluating NVIDIA (NASDAQ:NVDA) against its key competitors in the Semiconductors & Semiconductor Equipment industry. By examining key 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 | 49.82 | 42.52 | 26.10 | 28.72% | $31.94 | $33.85 | 55.6% |
| Broadcom Inc | 92.31 | 23.20 | 29.06 | 5.8% | $8.29 | $10.7 | 22.03% |
| Taiwan Semiconductor Manufacturing Co Ltd | 28.52 | 8.99 | 12.11 | 8.71% | $684.78 | $547.37 | 38.65% |
| Advanced Micro Devices Inc | 96.08 | 4.36 | 8.85 | 1.48% | $0.72 | $3.06 | 31.71% |
| Micron Technology Inc | 28.62 | 3.50 | 5.32 | 3.79% | $4.33 | $3.51 | 36.56% |
| Qualcomm Inc | 15.84 | 6.51 | 4.24 | 9.71% | $3.52 | $5.76 | 10.35% |
| ARM Holdings PLC | 233.11 | 23.26 | 39.73 | 1.88% | $0.17 | $1.02 | 12.14% |
| Texas Instruments Inc | 32.47 | 9.85 | 9.77 | 7.85% | $2.09 | $2.58 | 16.38% |
| Analog Devices Inc | 62.11 | 3.52 | 11.71 | 1.5% | $1.33 | $1.79 | 24.57% |
| NXP Semiconductors NV | 26.34 | 5.82 | 4.66 | 4.71% | $0.92 | $1.56 | -6.43% |
| Monolithic Power Systems Inc | 22.42 | 12.06 | 16.30 | 4.01% | $0.18 | $0.37 | 30.97% |
| Credo Technology Group Holding Ltd | 228.36 | 36.40 | 50.96 | 8.67% | $0.07 | $0.15 | 273.57% |
| ASE Technology Holding Co Ltd | 22.78 | 2.54 | 1.21 | 2.49% | $26.99 | $25.69 | 7.5% |
| STMicroelectronics NV | 57.96 | 1.30 | 2.15 | -0.05% | $0.62 | $0.65 | -14.42% |
| First Solar Inc | 17.54 | 2.58 | 5.08 | 4.09% | $0.49 | $0.5 | 8.58% |
| ON Semiconductor Corp | 47.20 | 2.55 | 3.29 | 2.13% | $0.38 | $0.55 | -15.36% |
| United Microelectronics Corp | 12.40 | 1.54 | 2.16 | 2.45% | $24.98 | $16.88 | 3.45% |
| Skyworks Solutions Inc | 29.57 | 1.95 | 2.93 | 1.81% | $0.23 | $0.4 | 6.57% |
| Rambus Inc | 46 | 8.50 | 16.32 | 4.85% | $0.08 | $0.14 | 30.33% |
| Lattice Semiconductor Corp | 287.57 | 13.18 | 18.67 | 0.42% | $0.02 | $0.08 | -0.08% |
| Average | 73.01 | 9.03 | 12.87 | 4.02% | $40.01 | $32.78 | 27.21% |
By analyzing NVIDIA, we can infer the following trends:
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The stock's Price to Earnings ratio of 49.82 is lower than the industry average by 0.68x, suggesting potential value in the eyes of market participants.
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With a Price to Book ratio of 42.52, which is 4.71x 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 Price to Sales ratio of 26.1, which is 2.03x the industry average, suggests the stock could potentially be overvalued in relation to its sales performance compared to its peers.
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The Return on Equity (ROE) of 28.72% is 24.7% above the industry average, highlighting efficient use of equity to generate profits.
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Compared to its industry, the company has lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $31.94 Billion, which is 0.8x below the industry average, potentially indicating lower profitability or financial challenges.
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With higher gross profit of $33.85 Billion, which indicates 1.03x above the industry average, the company demonstrates stronger profitability and higher earnings from its core operations.
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The company's revenue growth of 55.6% exceeds the industry average of 27.21%, indicating strong sales performance and market outperformance.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio measures the financial leverage of a company by evaluating its debt relative to its equity.
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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Compared to its top 4 peers, NVIDIA has a stronger financial position indicated by its lower debt-to-equity ratio of 0.11.
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This suggests that the company relies less on debt financing and has a more favorable balance between debt and equity, which can be seen as a positive attribute 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. A high ROE reflects efficient use of shareholder equity. The low EBITDA may indicate lower operating cash flow. The high gross profit and revenue growth highlight 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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