Amidst the fast-paced and highly competitive business environment of today, conducting comprehensive company analysis is essential for investors and industry enthusiasts. 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 | 52.31 | 44.65 | 27.40 | 28.72% | $31.94 | $33.85 | 55.6% |
| Broadcom Inc | 86.87 | 21.83 | 27.35 | 5.8% | $8.29 | $10.7 | 22.03% |
| Taiwan Semiconductor Manufacturing Co Ltd | 29.49 | 9.30 | 12.53 | 8.71% | $684.78 | $547.37 | 38.65% |
| Advanced Micro Devices Inc | 95.68 | 4.35 | 8.81 | 1.48% | $0.72 | $3.06 | 31.71% |
| Micron Technology Inc | 29.66 | 3.63 | 5.51 | 3.79% | $4.33 | $3.51 | 36.56% |
| Qualcomm Inc | 16.38 | 6.73 | 4.38 | 9.71% | $3.52 | $5.76 | 10.35% |
| Texas Instruments Inc | 32.84 | 9.96 | 9.88 | 7.85% | $2.09 | $2.58 | 16.38% |
| ARM Holdings PLC | 218.91 | 21.84 | 37.31 | 1.88% | $0.17 | $1.02 | 12.14% |
| Analog Devices Inc | 62.94 | 3.57 | 11.86 | 1.5% | $1.33 | $1.79 | 24.57% |
| NXP Semiconductors NV | 26.90 | 5.95 | 4.76 | 4.71% | $0.92 | $1.56 | -6.43% |
| Monolithic Power Systems Inc | 24.14 | 12.99 | 17.55 | 4.01% | $0.18 | $0.37 | 30.97% |
| Credo Technology Group Holding Ltd | 227.92 | 36.33 | 50.86 | 8.67% | $0.07 | $0.15 | 273.57% |
| ASE Technology Holding Co Ltd | 23.47 | 2.61 | 1.25 | 2.49% | $26.99 | $25.69 | 7.5% |
| STMicroelectronics NV | 60.68 | 1.36 | 2.25 | -0.05% | $0.62 | $0.65 | -14.42% |
| First Solar Inc | 18.74 | 2.75 | 5.43 | 4.09% | $0.49 | $0.5 | 8.58% |
| ON Semiconductor Corp | 49.05 | 2.65 | 3.41 | 2.13% | $0.38 | $0.55 | -15.36% |
| United Microelectronics Corp | 13.10 | 1.63 | 2.28 | 2.45% | $24.98 | $16.88 | 3.45% |
| Skyworks Solutions Inc | 33.06 | 2.18 | 3.27 | 1.81% | $0.23 | $0.4 | 6.57% |
| Rambus Inc | 50.68 | 9.37 | 17.98 | 4.85% | $0.08 | $0.14 | 30.33% |
| Lattice Semiconductor Corp | 324.83 | 14.89 | 21.09 | 0.42% | $0.02 | $0.08 | -0.08% |
| Average | 75.02 | 9.15 | 13.04 | 4.02% | $40.01 | $32.78 | 27.21% |
Upon a comprehensive analysis of NVIDIA, the following trends can be discerned:
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The Price to Earnings ratio of 52.31 is 0.7x lower than the industry average, indicating potential undervaluation for the stock.
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The elevated Price to Book ratio of 44.65 relative to the industry average by 4.88x suggests company might be overvalued based on its book value.
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The Price to Sales ratio of 27.4, which is 2.1x 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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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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The company is experiencing remarkable revenue growth, with a rate of 55.6%, outperforming the industry average of 27.21%.
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.
When examining NVIDIA in comparison to its top 4 peers with respect to the Debt-to-Equity ratio, the following information becomes apparent:
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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 PE ratio suggests NVIDIA is undervalued compared to its peers in the Semiconductors & Semiconductor Equipment industry. However, the high PB and PS ratios indicate that the market values the company's assets and sales more highly. On the other hand, the high ROE, gross profit, and revenue growth highlight NVIDIA's strong profitability and growth potential, outperforming its industry peers. The low EBITDA may indicate some challenges in operational efficiency.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
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