In today's fast-paced and competitive business landscape, it is essential for investors and industry enthusiasts to thoroughly analyze companies before making investment decisions. In this article, we will conduct a comprehensive industry comparison, evaluating NVIDIA (NASDAQ:NVDA) against its key competitors in the Semiconductors & Semiconductor Equipment industry. By examining key 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 | 47.41 | 39.15 | 25.16 | 29.14% | $38.75 | $41.85 | 62.49% |
| Broadcom Inc | 69.86 | 19.44 | 25.31 | 11.02% | $9.86 | $12.25 | 28.18% |
| Micron Technology Inc | 41.38 | 8.33 | 11.61 | 9.28% | $8.35 | $7.65 | 56.65% |
| Advanced Micro Devices Inc | 132.32 | 6.77 | 12.88 | 2.06% | $2.11 | $4.78 | 35.59% |
| Texas Instruments Inc | 39.66 | 12.05 | 11.16 | 7.07% | $2.24 | $2.72 | -6.73% |
| Qualcomm Inc | 30.48 | 7.69 | 3.81 | -12.88% | $3.51 | $6.24 | 10.03% |
| Analog Devices Inc | 69.65 | 4.59 | 14.32 | 2.32% | $1.47 | $1.94 | 25.91% |
| Marvell Technology Inc | 29.44 | 5.05 | 9.32 | 13.84% | $2.58 | $1.07 | 36.83% |
| NXP Semiconductors NV | 29.67 | 6.01 | 5.08 | 6.43% | $1.11 | $1.79 | -2.37% |
| Monolithic Power Systems Inc | 29.80 | 15.60 | 21.02 | 5.12% | $0.21 | $0.41 | 18.88% |
| ON Semiconductor Corp | 88.95 | 3.30 | 4.39 | 3.22% | $0.44 | $0.59 | -11.98% |
| First Solar Inc | 19.14 | 2.97 | 5.31 | 5.19% | $0.61 | $0.61 | 79.67% |
| Credo Technology Group Holding Ltd | 111.78 | 18.21 | 31.11 | 7.99% | $0.09 | $0.18 | 272.08% |
| Tower Semiconductor Ltd | 80.37 | 5.49 | 10.41 | 1.9% | $0.13 | $0.09 | 6.79% |
| Rambus Inc | 59.28 | 10.40 | 19.96 | 3.84% | $0.08 | $0.14 | 22.68% |
| Lattice Semiconductor Corp | 424.20 | 16.43 | 23.69 | 0.4% | $0.01 | $0.09 | 4.92% |
| Average | 83.73 | 9.49 | 13.96 | 4.45% | $2.19 | $2.7 | 38.48% |
When analyzing NVIDIA, the following trends become evident:
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With a Price to Earnings ratio of 47.41, which is 0.57x 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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The elevated Price to Book ratio of 39.15 relative to the industry average by 4.13x suggests company might be overvalued based on its book value.
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The stock's relatively high Price to Sales ratio of 25.16, surpassing the industry average by 1.8x, may indicate an aspect of overvaluation in terms of sales performance.
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The Return on Equity (ROE) of 29.14% is 24.69% above the industry average, highlighting efficient use of equity to generate profits.
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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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Compared to its industry, 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 38.48%, indicating strong sales performance and market outperformance.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio is a key indicator of a company's financial health and its reliance on debt financing.
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 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 prospects within the industry sector.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
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