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 | 46.16 | 38.12 | 24.49 | 29.14% | $38.75 | $41.85 | 62.49% |
| Broadcom Inc | 68.10 | 18.95 | 24.68 | 11.02% | $9.86 | $12.25 | 28.18% |
| Micron Technology Inc | 36.99 | 7.45 | 10.38 | 9.28% | $8.35 | $7.65 | 56.65% |
| Advanced Micro Devices Inc | 131.58 | 6.73 | 12.81 | 2.06% | $2.11 | $4.78 | 35.59% |
| Texas Instruments Inc | 35.81 | 10.74 | 10.42 | 8.21% | $2.24 | $2.72 | 14.24% |
| Qualcomm Inc | 30.84 | 7.78 | 3.86 | -12.88% | $3.51 | $6.24 | 10.03% |
| Analog Devices Inc | 66.67 | 4.39 | 13.70 | 2.32% | $1.47 | $1.94 | 25.91% |
| Marvell Technology Inc | 28.79 | 4.93 | 9.12 | 13.84% | $2.58 | $1.07 | 36.83% |
| NXP Semiconductors NV | 28.56 | 5.79 | 4.89 | 6.43% | $1.11 | $1.79 | -2.37% |
| Monolithic Power Systems Inc | 27.40 | 14.34 | 19.32 | 5.12% | $0.21 | $0.41 | 18.88% |
| First Solar Inc | 18.65 | 2.89 | 5.17 | 5.19% | $0.61 | $0.61 | 79.67% |
| ON Semiconductor Corp | 83.74 | 3.11 | 4.13 | 3.22% | $0.44 | $0.59 | -11.98% |
| Credo Technology Group Holding Ltd | 110.36 | 17.98 | 30.71 | 7.99% | $0.09 | $0.18 | 272.08% |
| Tower Semiconductor Ltd | 73.44 | 5.02 | 9.51 | 1.9% | $0.13 | $0.09 | 6.79% |
| Rambus Inc | 54.38 | 9.54 | 18.31 | 3.84% | $0.08 | $0.14 | 22.68% |
| Lattice Semiconductor Corp | 417.40 | 16.16 | 23.31 | 0.4% | $0.01 | $0.09 | 4.92% |
| Average | 80.85 | 9.05 | 13.35 | 4.53% | $2.19 | $2.7 | 39.87% |
When closely examining NVIDIA, the following trends emerge:
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At 46.16, the stock's Price to Earnings ratio is 0.57x less than the industry average, suggesting favorable growth potential.
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With a Price to Book ratio of 38.12, which is 4.21x 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 stock's relatively high Price to Sales ratio of 24.49, surpassing the industry average by 1.83x, may indicate an aspect of overvaluation in terms of sales performance.
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The Return on Equity (ROE) of 29.14% is 24.61% above the industry average, highlighting 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 17.69x above the industry average, indicating stronger profitability and robust cash flow generation.
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With higher gross profit of $41.85 Billion, which indicates 15.5x above the industry average, the company demonstrates stronger profitability and higher earnings from its core operations.
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The company is experiencing remarkable revenue growth, with a rate of 62.49%, outperforming the industry average of 39.87%.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio provides insights into the proportion of debt a company has in relation to its equity and asset value.
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.
In light of the Debt-to-Equity ratio, a comparison between NVIDIA and its top 4 peers reveals the following information:
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Among its top 4 peers, NVIDIA has a stronger financial position with a lower debt-to-equity ratio of 0.09.
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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
For NVIDIA, the PE ratio is low compared to peers, indicating potential undervaluation. The high PB and PS ratios suggest strong market sentiment and premium valuation. In terms of ROE, EBITDA, gross profit, and revenue growth, NVIDIA outperforms industry peers, reflecting robust financial performance and growth prospects.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
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