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 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. 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 | 51.40 | 46.35 | 26.54 | 23.01% | $22.58 | $26.67 | 69.18% |
| Broadcom Inc | 100.43 | 18.60 | 23.29 | 7.12% | $8.02 | $10.2 | 20.16% |
| Taiwan Semiconductor Manufacturing Co Ltd | 27.53 | 7.81 | 11.34 | 8.19% | $608.71 | $493.4 | 41.61% |
| Advanced Micro Devices Inc | 100.66 | 3.86 | 8.12 | 1.23% | $1.59 | $3.74 | 35.9% |
| Texas Instruments Inc | 40.91 | 11.96 | 12.37 | 7.08% | $1.85 | $2.31 | 11.14% |
| Qualcomm Inc | 16.55 | 6.42 | 4.31 | 10.3% | $3.67 | $6.04 | 16.93% |
| ARM Holdings PLC | 206.79 | 24.02 | 41.14 | 3.17% | $0.46 | $1.21 | 33.73% |
| Micron Technology Inc | 22.03 | 2.70 | 4.09 | 3.79% | $4.33 | $3.51 | 36.56% |
| Analog Devices Inc | 66.76 | 3.48 | 12.48 | 1.63% | $1.2 | $1.61 | 22.28% |
| Monolithic Power Systems Inc | 20.24 | 11.12 | 15.45 | 4.17% | $0.18 | $0.35 | 39.24% |
| STMicroelectronics NV | 27.36 | 1.63 | 2.46 | 0.32% | $0.51 | $0.84 | -27.36% |
| ON Semiconductor Corp | 39.31 | 2.95 | 3.64 | -5.78% | $-0.37 | $0.29 | -22.39% |
| ASE Technology Holding Co Ltd | 20.04 | 2.12 | 1.09 | 2.39% | $27.16 | $24.89 | 11.56% |
| First Solar Inc | 15.72 | 2.42 | 4.67 | 2.59% | $0.35 | $0.34 | 6.35% |
| United Microelectronics Corp | 12.28 | 1.47 | 2.41 | 2.06% | $23.86 | $15.45 | 5.91% |
| Credo Technology Group Holding Ltd | 322.79 | 23.57 | 38.83 | 5.63% | $0.04 | $0.11 | 179.73% |
| Skyworks Solutions Inc | 30.77 | 1.99 | 3.21 | 1.11% | $0.22 | $0.39 | -8.87% |
| Qorvo Inc | 153.07 | 2.43 | 2.28 | 0.93% | $0.11 | $0.37 | -7.6% |
| Universal Display Corp | 33.29 | 4.59 | 11.77 | 3.93% | $0.08 | $0.13 | 0.62% |
| Lattice Semiconductor Corp | 140.57 | 10.10 | 14.71 | 0.71% | $0.02 | $0.08 | -14.68% |
| Average | 73.53 | 7.54 | 11.46 | 3.19% | $35.89 | $29.75 | 20.04% |
Upon a comprehensive analysis of NVIDIA, the following trends can be discerned:
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The stock's Price to Earnings ratio of 51.4 is lower than the industry average by 0.7x, suggesting potential value in the eyes of market participants.
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The elevated Price to Book ratio of 46.35 relative to the industry average by 6.15x suggests company might be overvalued based on its book value.
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The stock's relatively high Price to Sales ratio of 26.54, surpassing the industry average by 2.32x, may indicate an aspect of overvaluation in terms of sales performance.
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With a Return on Equity (ROE) of 23.01% that is 19.82% above the industry average, it appears that the company exhibits efficient use of equity to generate profits.
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The company has lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $22.58 Billion, which is 0.63x below the industry average. This potentially indicates lower profitability or financial challenges.
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With lower gross profit of $26.67 Billion, which indicates 0.9x below the industry average, the company may experience lower revenue after accounting for production costs.
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The company is experiencing remarkable revenue growth, with a rate of 69.18%, outperforming the industry average of 20.04%.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio assesses the extent to which a company relies on borrowed funds compared to its 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.
In terms of the Debt-to-Equity ratio, NVIDIA stands in comparison with its top 4 peers, leading to the following comparisons:
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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 0.12, 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
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 and revenue growth, along with low EBITDA and gross profit, may indicate potential for strong performance and growth in the future.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
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