In today's rapidly changing and fiercely competitive business landscape, it is vital for investors and industry enthusiasts to carefully evaluate companies. In this article, we will perform a comprehensive industry comparison, evaluating NVIDIA (NASDAQ:NVDA) against its key competitors in the Semiconductors & Semiconductor Equipment industry. By analyzing important 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 | 46.10 | 38.07 | 24.46 | 29.14% | $38.75 | $41.85 | 62.49% |
| Broadcom Inc | 73.73 | 20.51 | 26.72 | 11.02% | $9.86 | $12.25 | 28.18% |
| Micron Technology Inc | 34.48 | 6.94 | 9.68 | 9.28% | $8.35 | $7.65 | 56.65% |
| Advanced Micro Devices Inc | 121.38 | 6.21 | 11.82 | 2.06% | $2.11 | $4.78 | 35.59% |
| Intel Corp | 782.67 | 2.11 | 3.87 | 3.98% | $7.85 | $5.22 | 2.78% |
| Qualcomm Inc | 31.82 | 8.05 | 3.98 | -12.88% | $3.51 | $6.24 | 10.03% |
| Texas Instruments Inc | 34.90 | 10.47 | 10.16 | 8.21% | $2.24 | $2.72 | 14.24% |
| Analog Devices Inc | 65.84 | 4.35 | 13.53 | 2.32% | $1.47 | $1.94 | 25.91% |
| ARM Holdings PLC | 135.62 | 15.15 | 25.56 | 3.3% | $0.22 | $1.11 | 34.48% |
| Marvell Technology Inc | 28.33 | 4.85 | 8.97 | 13.84% | $2.58 | $1.07 | 36.83% |
| NXP Semiconductors NV | 29.31 | 5.94 | 5.02 | 6.43% | $1.11 | $1.79 | -2.37% |
| Monolithic Power Systems Inc | 26.51 | 13.87 | 18.69 | 5.12% | $0.21 | $0.41 | 18.88% |
| ASE Technology Holding Co Ltd | 39.56 | 4.22 | 2.15 | 3.56% | $32.4 | $28.88 | 5.29% |
| First Solar Inc | 18.71 | 2.90 | 5.19 | 5.19% | $0.61 | $0.61 | 79.67% |
| Credo Technology Group Holding Ltd | 130.15 | 21.20 | 36.22 | 7.99% | $0.09 | $0.18 | 272.08% |
| ON Semiconductor Corp | 82.64 | 3.07 | 4.08 | 3.22% | $0.44 | $0.59 | -11.98% |
| STMicroelectronics NV | 48.33 | 1.39 | 2.21 | 1.33% | $0.31 | $1.06 | -1.97% |
| United Microelectronics Corp | 17.39 | 2.05 | 3.08 | 4.29% | $30.07 | $17.62 | -2.25% |
| Tower Semiconductor Ltd | 75.05 | 5.13 | 9.72 | 1.9% | $0.13 | $0.09 | 6.79% |
| Lattice Semiconductor Corp | 416.10 | 16.11 | 23.23 | 0.4% | $0.01 | $0.09 | 4.92% |
| Rambus Inc | 51.42 | 9.02 | 17.31 | 3.84% | $0.08 | $0.14 | 22.68% |
| Average | 112.2 | 8.18 | 12.06 | 4.22% | $5.18 | $4.72 | 31.82% |
After examining NVIDIA, the following trends can be inferred:
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The Price to Earnings ratio of 46.1 is 0.41x lower than the industry average, indicating potential undervaluation for the stock.
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The elevated Price to Book ratio of 38.07 relative to the industry average by 4.65x suggests company might be overvalued based on its book value.
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The Price to Sales ratio of 24.46, 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 29.14% that is 24.92% above the industry average, it appears that the company exhibits efficient use of equity to generate profits.
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The company exhibits higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $38.75 Billion, which is 7.48x above the industry average, implying stronger profitability and robust cash flow generation.
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Compared to its industry, the company has higher gross profit of $41.85 Billion, which indicates 8.87x above the industry average, indicating stronger profitability and higher earnings from its core operations.
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The company's revenue growth of 62.49% is notably higher compared to the industry average of 31.82%, showcasing exceptional sales performance and strong demand for its products or services.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio is a financial metric that helps determine the level of financial risk associated with a company's capital structure.
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 is in a relatively stronger financial position compared to its top 4 peers, as evidenced by its lower debt-to-equity ratio of 0.09.
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This implies that the company relies less on debt financing and has a more favorable balance between debt and equity.
Key Takeaways
For NVIDIA in the Semiconductors & Semiconductor Equipment industry, the PE ratio is low compared to peers, indicating potential undervaluation. The PB and PS ratios are high, suggesting overvaluation relative to industry standards. In terms of ROE, EBITDA, gross profit, and revenue growth, NVIDIA outperforms its peers, reflecting strong financial performance and growth potential.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
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