In the dynamic and fiercely competitive business environment, conducting a thorough analysis of companies is crucial for investors and industry enthusiasts. In this article, we will perform an extensive industry comparison, evaluating NVIDIA (NASDAQ:NVDA) in relation to its major competitors in the Semiconductors & Semiconductor Equipment industry. By closely examining crucial financial metrics, market position, and growth prospects, we aim to offer 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 | 44.08 | 36.40 | 23.39 | 29.14% | $38.75 | $41.85 | 62.49% |
| Broadcom Inc | 69.73 | 19.40 | 25.27 | 11.02% | $9.86 | $12.25 | 28.18% |
| Micron Technology Inc | 34.70 | 6.99 | 9.74 | 9.28% | $8.35 | $7.65 | 56.65% |
| Advanced Micro Devices Inc | 121.42 | 6.21 | 11.82 | 2.06% | $2.11 | $4.78 | 35.59% |
| Intel Corp | 809.33 | 2.18 | 4 | 3.98% | $7.85 | $5.22 | 2.78% |
| Texas Instruments Inc | 34.53 | 10.36 | 10.05 | 8.21% | $2.24 | $2.72 | 14.24% |
| Qualcomm Inc | 30.75 | 7.78 | 3.84 | -12.88% | $3.51 | $6.24 | 10.03% |
| Analog Devices Inc | 64.84 | 4.28 | 13.33 | 2.32% | $1.47 | $1.94 | 25.91% |
| ARM Holdings PLC | 137.40 | 15.35 | 25.89 | 3.3% | $0.22 | $1.11 | 34.48% |
| Marvell Technology Inc | 28.10 | 4.81 | 8.90 | 13.84% | $2.58 | $1.07 | 36.83% |
| NXP Semiconductors NV | 28.52 | 5.78 | 4.88 | 6.43% | $1.11 | $1.79 | -2.37% |
| Monolithic Power Systems Inc | 26.54 | 13.89 | 18.72 | 5.12% | $0.21 | $0.41 | 18.88% |
| ASE Technology Holding Co Ltd | 38.51 | 4.11 | 2.09 | 3.56% | $32.4 | $28.88 | 5.29% |
| United Microelectronics Corp | 20.14 | 2.37 | 3.56 | 4.29% | $30.07 | $17.62 | -2.25% |
| Credo Technology Group Holding Ltd | 132.09 | 21.52 | 36.76 | 7.99% | $0.09 | $0.18 | 272.08% |
| First Solar Inc | 18.58 | 2.88 | 5.15 | 5.19% | $0.61 | $0.61 | 79.67% |
| ON Semiconductor Corp | 82.27 | 3.06 | 4.06 | 3.22% | $0.44 | $0.59 | -11.98% |
| STMicroelectronics NV | 46.76 | 1.35 | 2.14 | 1.33% | $0.31 | $1.06 | -1.97% |
| Tower Semiconductor Ltd | 74.57 | 5.10 | 9.66 | 1.9% | $0.13 | $0.09 | 6.79% |
| Rambus Inc | 52.42 | 9.20 | 17.65 | 3.84% | $0.08 | $0.14 | 22.68% |
| Lattice Semiconductor Corp | 416.10 | 16.11 | 23.23 | 0.4% | $0.01 | $0.09 | 4.92% |
| Average | 113.36 | 8.14 | 12.04 | 4.22% | $5.18 | $4.72 | 31.82% |
Through a meticulous analysis of NVIDIA, we can observe the following trends:
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The Price to Earnings ratio of 44.08 is 0.39x lower than the industry average, indicating potential undervaluation for the stock.
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It could be trading at a premium in relation to its book value, as indicated by its Price to Book ratio of 36.4 which exceeds the industry average by 4.47x.
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The Price to Sales ratio of 23.39, which is 1.94x 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 has higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $38.75 Billion, which is 7.48x above the industry average, indicating 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% exceeds the industry average of 31.82%, indicating strong sales performance and market outperformance.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio is a measure that indicates the level of debt a company has taken on relative to the value of its assets net of liabilities.
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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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 0.09.
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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 more highly. On the other hand, the high ROE, EBITDA, gross profit, and revenue growth suggest that NVIDIA is performing well financially and experiencing strong growth compared to its industry counterparts.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
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