Inquiry Into Advanced Micro Devices's Competitor Dynamics In Semiconductors & Semiconductor Equipment Industry

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 Advanced Micro Devices AMD 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.

Advanced Micro Devices Background

Advanced Micro Devices designs a variety of digital semiconductors for markets such as PCs, gaming consoles, data centers, industrial, and automotive applications, among others. AMD's traditional strength was in central processing units, CPUs, and graphics processing units, or GPUs, used in PCs and data centers. Additionally, the firm supplies the chips found in prominent game consoles such as the Sony PlayStation and Microsoft Xbox. In 2022, the firm acquired field-programmable gate array, or FPGA, leader Xilinx to diversify its business and augment its opportunities in key end markets such as the data center and automotive.

Company P/E P/B P/S ROE EBITDA (in billions) Gross Profit (in billions) Revenue Growth
Advanced Micro Devices Inc 337.17 5.17 12.80 1.2% $1.22 $2.91 10.16%
NVIDIA Corp 75 52.05 36.63 32.23% $14.56 $16.79 265.28%
Broadcom Inc 49.74 8.83 15.03 2.81% $4.61 $7.38 34.17%
Qualcomm Inc 24.40 8.28 5.30 12.4% $3.58 $5.62 4.99%
Intel Corp 109.88 1.76 3.41 2.57% $5.57 $7.05 9.71%
Texas Instruments Inc 24.10 9.18 8.91 8.14% $1.98 $2.43 -12.7%
ARM Holdings PLC 1503.16 25.53 43.49 1.78% $0.18 $0.79 13.81%
Analog Devices Inc 34.80 2.72 8.47 1.3% $1.12 $1.47 -22.68%
Microchip Technology Inc 20.56 6.71 5.67 5.97% $0.75 $1.12 -18.6%
STMicroelectronics NV 9.41 2.26 2.29 6.69% $1.5 $1.95 -3.21%
Monolithic Power Systems Inc 74.08 15.41 17.38 4.85% $0.12 $0.25 -1.3%
ON Semiconductor Corp 14.41 3.87 3.82 7.37% $0.79 $0.94 -4.06%
GLOBALFOUNDRIES Inc 27.93 2.55 3.84 2.53% $0.73 $0.53 0.11%
ASE Technology Holding Co Ltd 24.20 2.52 1.30 3.17% $28.28 $25.76 4.16%
United Microelectronics Corp 9.31 1.86 2.74 4.72% $29.0 $20.46 -24.3%
First Solar Inc 21.60 2.68 5.41 5.38% $0.47 $0.5 15.58%
Skyworks Solutions Inc 18.91 2.74 3.68 3.76% $0.37 $0.51 -9.61%
Lattice Semiconductor Corp 40.28 14.81 14.13 14.98% $0.05 $0.12 -3.05%
Universal Display Corp 38.80 5.38 13.59 4.36% $0.08 $0.12 -6.34%
MACOM Technology Solutions Holdings Inc 95.27 6.97 11.36 1.27% $0.03 $0.09 -12.75%
Rambus Inc 19.75 6.22 14.29 5.87% $0.07 $0.1 -0.12%
Average 111.78 9.12 11.04 6.61% $4.69 $4.7 11.45%

By conducting an in-depth analysis of Advanced Micro Devices, we can identify the following trends:

  • The current Price to Earnings ratio of 337.17 is 3.02x higher than the industry average, indicating the stock is priced at a premium level according to the market sentiment.

  • Considering a Price to Book ratio of 5.17, which is well below the industry average by 0.57x, the stock may be undervalued based on its book value compared to its peers.

  • With a relatively high Price to Sales ratio of 12.8, which is 1.16x the industry average, the stock might be considered overvalued based on sales performance.

  • With a Return on Equity (ROE) of 1.2% that is 5.41% below the industry average, it appears that the company exhibits potential inefficiency in utilizing equity to generate profits.

  • Compared to its industry, the company has lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $1.22 Billion, which is 0.26x below the industry average, potentially indicating lower profitability or financial challenges.

  • With lower gross profit of $2.91 Billion, which indicates 0.62x below the industry average, the company may experience lower revenue after accounting for production costs.

  • The company is witnessing a substantial decline in revenue growth, with a rate of 10.16% compared to the industry average of 11.45%, which indicates a challenging sales environment.

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.

By considering the Debt-to-Equity ratio, Advanced Micro Devices can be compared to its top 4 peers, leading to the following observations:

  • Advanced Micro Devices is in a relatively stronger financial position compared to its top 4 peers, as evidenced by its lower debt-to-equity ratio of 0.05.

  • This implies that the company relies less on debt financing and has a more favorable balance between debt and equity.

Key Takeaways

The high PE ratio of Advanced Micro Devices indicates that investors are willing to pay a premium for its earnings compared to its peers in the Semiconductors & Semiconductor Equipment industry. The low PB ratio suggests that the market values the company's assets at a lower price relative to its stock price. With a high PS ratio, Advanced Micro Devices is generating more revenue per dollar of market cap compared to industry peers. On the other hand, the low ROE, EBITDA, gross profit, and revenue growth indicate that the company may be less efficient in generating profits and 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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