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 | 50.33 | 42.96 | 26.36 | 28.72% | $31.94 | $33.85 | 55.6% |
| Broadcom Inc | 88.45 | 22.23 | 27.84 | 5.8% | $8.29 | $10.7 | 22.03% |
| Taiwan Semiconductor Manufacturing Co Ltd | 28.63 | 9.03 | 12.16 | 8.71% | $684.78 | $547.37 | 38.65% |
| Advanced Micro Devices Inc | 94.25 | 4.28 | 8.68 | 1.48% | $0.72 | $3.06 | 31.71% |
| Micron Technology Inc | 29.32 | 3.59 | 5.45 | 3.79% | $4.33 | $3.51 | 36.56% |
| Qualcomm Inc | 16.11 | 6.62 | 4.31 | 9.71% | $3.52 | $5.76 | 10.35% |
| Texas Instruments Inc | 32.79 | 9.94 | 9.86 | 7.85% | $2.09 | $2.58 | 16.38% |
| ARM Holdings PLC | 216.53 | 21.60 | 36.91 | 1.88% | $0.17 | $1.02 | 12.14% |
| Analog Devices Inc | 62.42 | 3.54 | 11.76 | 1.5% | $1.33 | $1.79 | 24.57% |
| NXP Semiconductors NV | 26.70 | 5.90 | 4.72 | 4.71% | $0.92 | $1.56 | -6.43% |
| Monolithic Power Systems Inc | 23.98 | 12.90 | 17.42 | 4.01% | $0.18 | $0.37 | 30.97% |
| Credo Technology Group Holding Ltd | 235.50 | 37.54 | 52.56 | 8.67% | $0.07 | $0.15 | 273.57% |
| ASE Technology Holding Co Ltd | 22.95 | 2.55 | 1.22 | 2.49% | $26.99 | $25.69 | 7.5% |
| STMicroelectronics NV | 59.15 | 1.32 | 2.19 | -0.05% | $0.62 | $0.65 | -14.42% |
| First Solar Inc | 18.16 | 2.67 | 5.26 | 4.09% | $0.49 | $0.5 | 8.58% |
| ON Semiconductor Corp | 48.64 | 2.63 | 3.39 | 2.13% | $0.38 | $0.55 | -15.36% |
| United Microelectronics Corp | 12.88 | 1.60 | 2.24 | 2.45% | $24.98 | $16.88 | 3.45% |
| Skyworks Solutions Inc | 31.45 | 2.07 | 3.11 | 1.81% | $0.23 | $0.4 | 6.57% |
| Rambus Inc | 48.52 | 8.97 | 17.21 | 4.85% | $0.08 | $0.14 | 30.33% |
| Lattice Semiconductor Corp | 313.70 | 14.38 | 20.36 | 0.42% | $0.02 | $0.08 | -0.08% |
| Average | 74.22 | 9.12 | 12.98 | 4.02% | $40.01 | $32.78 | 27.21% |
When conducting a detailed analysis of NVIDIA, the following trends become clear:
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The Price to Earnings ratio of 50.33 is 0.68x lower than the industry average, indicating potential undervaluation for the stock.
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With a Price to Book ratio of 42.96, 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 26.36, 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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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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The Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $31.94 Billion is 0.8x below the industry average, suggesting potential lower profitability or financial challenges.
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The gross profit of $33.85 Billion is 1.03x above that of its industry, highlighting 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 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 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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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
The low P/E ratio suggests that NVIDIA may be undervalued compared to its peers in the Semiconductors & Semiconductor Equipment industry. However, the high P/B and P/S ratios indicate that the market values the company's assets and sales at a premium. On the other hand, the high ROE, gross profit margin, EBITDA, and revenue growth highlight NVIDIA's strong financial performance relative to its industry competitors.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
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