In the fast-paced and cutthroat world of business, conducting thorough company analysis is essential for investors and industry experts. In this article, we will undertake a comprehensive industry comparison, evaluating NVIDIA (NASDAQ: NVDA) in comparison to its major competitors within the Semiconductors & Semiconductor Equipment industry. By analyzing crucial 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 | 50.42 | 43.03 | 26.41 | 28.72% | $31.94 | $33.85 | 55.6% |
| Broadcom Inc | 87 | 21.87 | 27.39 | 5.8% | $8.29 | $10.7 | 22.03% |
| Taiwan Semiconductor Manufacturing Co Ltd | 30.48 | 9.61 | 12.95 | 8.71% | $684.78 | $547.37 | 38.65% |
| Advanced Micro Devices Inc | 96.34 | 4.38 | 8.87 | 1.48% | $0.72 | $3.06 | 31.71% |
| Qualcomm Inc | 16.75 | 6.88 | 4.48 | 9.71% | $3.52 | $5.76 | 10.35% |
| Micron Technology Inc | 21.31 | 3.34 | 4.87 | 6.1% | $4.33 | $3.51 | 21.65% |
| Texas Instruments Inc | 33.72 | 10.22 | 10.14 | 7.85% | $2.09 | $2.58 | 16.38% |
| ARM Holdings PLC | 218.64 | 21.81 | 37.27 | 1.88% | $0.17 | $1.02 | 12.14% |
| Analog Devices Inc | 63.26 | 3.59 | 11.92 | 1.5% | $1.33 | $1.79 | 24.57% |
| NXP Semiconductors NV | 27.13 | 6 | 4.80 | 4.71% | $0.92 | $1.56 | -6.43% |
| Monolithic Power Systems Inc | 23.77 | 12.79 | 17.27 | 4.01% | $0.18 | $0.37 | 30.97% |
| STMicroelectronics NV | 61.74 | 1.38 | 2.29 | -0.05% | $0.62 | $0.65 | -14.42% |
| Credo Technology Group Holding Ltd | 207.47 | 33.07 | 46.30 | 8.67% | $0.07 | $0.15 | 273.57% |
| ASE Technology Holding Co Ltd | 23.21 | 2.58 | 1.24 | 2.49% | $26.99 | $25.69 | 7.5% |
| First Solar Inc | 18.73 | 2.75 | 5.42 | 4.09% | $0.49 | $0.5 | 8.58% |
| ON Semiconductor Corp | 48.51 | 2.62 | 3.38 | 2.13% | $0.38 | $0.55 | -15.36% |
| United Microelectronics Corp | 13.55 | 1.69 | 2.36 | 2.45% | $24.98 | $16.88 | 3.45% |
| Skyworks Solutions Inc | 32.14 | 2.12 | 3.18 | 1.81% | $0.23 | $0.4 | 6.57% |
| Rambus Inc | 47.74 | 8.83 | 16.94 | 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 | 72.9 | 8.94 | 12.71 | 4.14% | $40.01 | $32.78 | 26.43% |
After examining NVIDIA, the following trends can be inferred:
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With a Price to Earnings ratio of 50.42, which is 0.69x less than the industry average, the stock shows potential for growth at a reasonable price, making it an interesting consideration for market participants.
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With a Price to Book ratio of 43.03, which is 4.81x 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 26.41, which is 2.08x 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 24.58% above the industry average, it appears that the company exhibits 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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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 26.43%, the company is demonstrating robust sales expansion and gaining market share.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio is an important measure to assess the financial structure and risk profile 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.
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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When considering the debt-to-equity ratio, NVIDIA exhibits a stronger financial position compared to its top 4 peers.
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This indicates that the company has a favorable balance between debt and equity, with a lower debt-to-equity ratio of 0.11, which can be perceived as a positive aspect 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. The high ROE reflects efficient use of shareholder funds, 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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