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 | 46.66 | 38.54 | 24.76 | 29.14% | $38.75 | $41.85 | 62.49% |
| Broadcom Inc | 69.77 | 19.41 | 25.28 | 11.02% | $9.86 | $12.25 | 28.18% |
| Micron Technology Inc | 39 | 7.85 | 10.95 | 9.28% | $8.35 | $7.65 | 56.65% |
| Advanced Micro Devices Inc | 131.95 | 6.75 | 12.85 | 2.06% | $2.11 | $4.78 | 35.59% |
| Texas Instruments Inc | 36.08 | 10.98 | 10.15 | 8.21% | $2.24 | $2.72 | 14.24% |
| Qualcomm Inc | 30.55 | 7.71 | 3.82 | -12.88% | $3.51 | $6.24 | 10.03% |
| Analog Devices Inc | 66.63 | 4.39 | 13.70 | 2.32% | $1.47 | $1.94 | 25.91% |
| Marvell Technology Inc | 29.20 | 5 | 9.25 | 13.84% | $2.58 | $1.07 | 36.83% |
| NXP Semiconductors NV | 28.36 | 5.75 | 4.85 | 6.43% | $1.11 | $1.79 | -2.37% |
| Monolithic Power Systems Inc | 28.10 | 14.71 | 19.82 | 5.12% | $0.21 | $0.41 | 18.88% |
| ON Semiconductor Corp | 85.79 | 3.19 | 4.23 | 3.22% | $0.44 | $0.59 | -11.98% |
| First Solar Inc | 18.04 | 2.80 | 5 | 5.19% | $0.61 | $0.61 | 79.67% |
| Credo Technology Group Holding Ltd | 111.70 | 18.20 | 31.08 | 7.99% | $0.09 | $0.18 | 272.08% |
| Tower Semiconductor Ltd | 76.66 | 5.24 | 9.93 | 1.9% | $0.13 | $0.09 | 6.79% |
| Rambus Inc | 55.10 | 9.67 | 18.55 | 3.84% | $0.08 | $0.14 | 22.68% |
| Lattice Semiconductor Corp | 424.80 | 16.45 | 23.72 | 0.4% | $0.01 | $0.09 | 4.92% |
| Average | 82.12 | 9.21 | 13.55 | 4.53% | $2.19 | $2.7 | 39.87% |
By conducting a comprehensive analysis of NVIDIA, the following trends become evident:
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At 46.66, the stock's Price to Earnings ratio is 0.57x less than the industry average, suggesting favorable growth potential.
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The elevated Price to Book ratio of 38.54 relative to the industry average by 4.18x suggests company might be overvalued based on its book value.
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With a relatively high Price to Sales ratio of 24.76, which is 1.83x the industry average, the stock might be considered overvalued based on sales performance.
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The company has a higher Return on Equity (ROE) of 29.14%, which is 24.61% above the industry average. This suggests efficient use of equity to generate profits and demonstrates profitability and growth potential.
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With higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $38.75 Billion, which is 17.69x above the industry average, the company demonstrates stronger profitability and robust cash flow generation.
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The company has higher gross profit of $41.85 Billion, which indicates 15.5x 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 39.87%, indicating strong sales performance and market outperformance.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio gauges the extent to which a company has financed its operations through debt relative to equity.
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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NVIDIA demonstrates a stronger financial position compared to its top 4 peers in the sector.
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With a lower debt-to-equity ratio of 0.09, the company relies less on debt financing and maintains a healthier balance between debt and equity, which can be viewed positively by investors.
Key Takeaways
For NVIDIA in the Semiconductors & Semiconductor Equipment industry, the PE ratio is low compared to peers, indicating potential undervaluation. The high PB and PS ratios suggest strong market sentiment and revenue multiples. In terms of ROE, EBITDA, gross profit, and revenue growth, NVIDIA outperforms its industry peers, reflecting strong financial performance and growth prospects.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
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