In the ever-changing and fiercely competitive business landscape, conducting thorough company analysis is crucial for investors and industry experts. In this article, we will undertake a comprehensive industry comparison, evaluating NVIDIA (NASDAQ:NVDA) and its primary competitors in the Semiconductors & Semiconductor Equipment industry. By closely examining key financial metrics, market position, and growth prospects, our aim is 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 | 50.83 | 43.39 | 26.63 | 28.72% | $31.94 | $33.85 | 55.6% |
| Broadcom Inc | 86.91 | 21.84 | 27.36 | 5.8% | $8.29 | $10.7 | 22.03% |
| Taiwan Semiconductor Manufacturing Co Ltd | 30.69 | 9.68 | 13.04 | 8.71% | $684.78 | $547.37 | 38.65% |
| Advanced Micro Devices Inc | 96.35 | 4.38 | 8.87 | 1.48% | $0.72 | $3.06 | 31.71% |
| Micron Technology Inc | 21.92 | 3.44 | 5.01 | 3.79% | $4.33 | $3.51 | 36.56% |
| Qualcomm Inc | 16.36 | 6.72 | 4.38 | 9.71% | $3.52 | $5.76 | 10.35% |
| Texas Instruments Inc | 33.28 | 10.09 | 10.01 | 7.85% | $2.09 | $2.58 | 16.38% |
| ARM Holdings PLC | 213.62 | 21.31 | 36.41 | 1.88% | $0.17 | $1.02 | 12.14% |
| Analog Devices Inc | 62.79 | 3.56 | 11.83 | 1.5% | $1.33 | $1.79 | 24.57% |
| NXP Semiconductors NV | 26.89 | 5.94 | 4.76 | 4.71% | $0.92 | $1.56 | -6.43% |
| Monolithic Power Systems Inc | 23.92 | 12.87 | 17.39 | 4.01% | $0.18 | $0.37 | 30.97% |
| Credo Technology Group Holding Ltd | 225.36 | 35.92 | 50.29 | 8.67% | $0.07 | $0.15 | 273.57% |
| STMicroelectronics NV | 60.98 | 1.36 | 2.26 | -0.05% | $0.62 | $0.65 | -14.42% |
| ASE Technology Holding Co Ltd | 23.53 | 2.62 | 1.26 | 2.49% | $26.99 | $25.69 | 7.5% |
| First Solar Inc | 18.44 | 2.71 | 5.34 | 4.09% | $0.49 | $0.5 | 8.58% |
| ON Semiconductor Corp | 48.02 | 2.60 | 3.34 | 2.13% | $0.38 | $0.55 | -15.36% |
| United Microelectronics Corp | 13.35 | 1.66 | 2.32 | 2.45% | $24.98 | $16.88 | 3.45% |
| Skyworks Solutions Inc | 32.37 | 2.13 | 3.20 | 1.81% | $0.23 | $0.4 | 6.57% |
| Rambus Inc | 48.64 | 8.99 | 17.26 | 4.85% | $0.08 | $0.14 | 30.33% |
| Lattice Semiconductor Corp | 323.39 | 14.82 | 20.99 | 0.42% | $0.02 | $0.08 | -0.08% |
| Average | 74.04 | 9.09 | 12.91 | 4.02% | $40.01 | $32.78 | 27.21% |
When closely examining NVIDIA, the following trends emerge:
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At 50.83, the stock's Price to Earnings ratio is 0.69x less than the industry average, suggesting favorable growth potential.
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The elevated Price to Book ratio of 43.39 relative to the industry average by 4.77x suggests company might be overvalued based on its book value.
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With a relatively high Price to Sales ratio of 26.63, which is 2.06x 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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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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The company's revenue growth of 55.6% is notably higher compared to the industry average of 27.21%, showcasing exceptional sales performance and strong demand for its products or services.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio helps evaluate the capital structure and financial leverage of a company.
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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Among its top 4 peers, NVIDIA has a stronger financial position with a lower debt-to-equity ratio of 0.11.
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This indicates that the company relies less on debt financing and maintains a more favorable balance between debt and equity, which can be viewed positively by 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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