In the fast-paced and highly competitive business world of today, conducting thorough company analysis is essential for investors and industry observers. In this article, we will conduct an extensive industry comparison, evaluating NVIDIA NVDA in relation to its major competitors in the Semiconductors & Semiconductor Equipment industry. Through a detailed examination of key financial metrics, market standing, and growth prospects, our objective is to provide valuable insights and illuminate 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 | 50.21 | 42.85 | 26.30 | 28.72% | $31.94 | $33.85 | 55.6% |
| Broadcom Inc | 88.55 | 22.26 | 27.88 | 5.8% | $8.29 | $10.7 | 22.03% |
| Taiwan Semiconductor Manufacturing Co Ltd | 29 | 9.15 | 12.32 | 8.71% | $684.78 | $547.37 | 38.65% |
| Advanced Micro Devices Inc | 94.56 | 4.30 | 8.71 | 1.48% | $0.72 | $3.06 | 31.71% |
| Micron Technology Inc | 30.43 | 3.72 | 5.66 | 3.79% | $4.33 | $3.51 | 36.56% |
| Qualcomm Inc | 16.23 | 6.67 | 4.34 | 9.71% | $3.52 | $5.76 | 10.35% |
| Texas Instruments Inc | 33.20 | 10.07 | 9.99 | 7.85% | $2.09 | $2.58 | 16.38% |
| ARM Holdings PLC | 222.03 | 22.15 | 37.84 | 1.88% | $0.17 | $1.02 | 12.14% |
| Analog Devices Inc | 63.37 | 3.59 | 11.94 | 1.5% | $1.33 | $1.79 | 24.57% |
| NXP Semiconductors NV | 27 | 5.97 | 4.78 | 4.71% | $0.92 | $1.56 | -6.43% |
| Monolithic Power Systems Inc | 24.01 | 12.92 | 17.45 | 4.01% | $0.18 | $0.37 | 30.97% |
| Credo Technology Group Holding Ltd | 239.32 | 38.15 | 53.41 | 8.67% | $0.07 | $0.15 | 273.57% |
| STMicroelectronics NV | 60.40 | 1.35 | 2.24 | -0.05% | $0.62 | $0.65 | -14.42% |
| ASE Technology Holding Co Ltd | 22.94 | 2.55 | 1.22 | 2.49% | $26.99 | $25.69 | 7.5% |
| First Solar Inc | 17.92 | 2.63 | 5.19 | 4.09% | $0.49 | $0.5 | 8.58% |
| ON Semiconductor Corp | 49.36 | 2.67 | 3.44 | 2.13% | $0.38 | $0.55 | -15.36% |
| United Microelectronics Corp | 12.59 | 1.57 | 2.19 | 2.45% | $24.98 | $16.88 | 3.45% |
| Rambus Inc | 50.92 | 9.41 | 18.07 | 4.85% | $0.08 | $0.14 | 30.33% |
| Skyworks Solutions Inc | 30.69 | 2.02 | 3.04 | 1.81% | $0.23 | $0.4 | 6.57% |
| Lattice Semiconductor Corp | 311.48 | 14.27 | 20.22 | 0.42% | $0.02 | $0.08 | -0.08% |
| Average | 74.95 | 9.23 | 13.15 | 4.02% | $40.01 | $32.78 | 27.21% |
Upon a comprehensive analysis of NVIDIA, the following trends can be discerned:
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A Price to Earnings ratio of 50.21 significantly below the industry average by 0.67x suggests undervaluation. This can make the stock appealing for those seeking growth.
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The elevated Price to Book ratio of 42.85 relative to the industry average by 4.64x suggests company might be overvalued based on its book value.
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The stock's relatively high Price to Sales ratio of 26.3, surpassing the industry average by 2.0x, may indicate an aspect of overvaluation in terms of sales performance.
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With a Return on Equity (ROE) of 28.72% that is 24.7% above the industry average, it appears that the company exhibits efficient use of equity to generate profits.
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Compared to its industry, the company has lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $31.94 Billion, which is 0.8x below the industry average, potentially indicating lower profitability or financial challenges.
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Compared to its industry, the company has higher gross profit of $33.85 Billion, which indicates 1.03x above the industry average, indicating stronger profitability and higher earnings from its core operations.
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The company's revenue growth of 55.6% is notably higher compared to the industry average of 27.21%, showcasing exceptional sales performance and strong demand for its products or services.
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 evaluating NVIDIA alongside its top 4 peers in terms of the Debt-to-Equity ratio, the following insights arise:
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In terms of the debt-to-equity ratio, NVIDIA has a lower level of debt compared to its top 4 peers, indicating a stronger financial position.
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This implies that the company relies less on debt financing and has a more favorable balance between debt and equity with a lower debt-to-equity ratio of 0.11.
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. A high ROE reflects efficient use of shareholder funds, while low EBITDA may indicate lower operating cash flow. The high gross profit margin signifies strong profitability, and high revenue growth indicates a positive sales trend compared to industry peers.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
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