Amidst the fast-paced and highly competitive business environment of today, conducting comprehensive company analysis is essential for investors and industry enthusiasts. In this article, we will delve into an extensive industry comparison, evaluating NVIDIA (NASDAQ: NVDA) in comparison to its major competitors within the Semiconductors & Semiconductor Equipment industry. By analyzing critical 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 | 50.62 | 43.21 | 26.52 | 28.72% | $31.94 | $33.85 | 55.6% |
| Broadcom Inc | 86.18 | 21.66 | 27.13 | 5.8% | $8.29 | $10.7 | 22.03% |
| Taiwan Semiconductor Manufacturing Co Ltd | 30.09 | 9.49 | 12.78 | 8.71% | $684.78 | $547.37 | 38.65% |
| Advanced Micro Devices Inc | 96.57 | 4.39 | 8.89 | 1.48% | $0.72 | $3.06 | 31.71% |
| Qualcomm Inc | 16.38 | 6.73 | 4.38 | 9.71% | $3.52 | $5.76 | 10.35% |
| Micron Technology Inc | 20.66 | 3.24 | 4.72 | 6.1% | $4.33 | $3.51 | 21.65% |
| Texas Instruments Inc | 33.28 | 10.09 | 10.01 | 7.85% | $2.09 | $2.58 | 16.38% |
| ARM Holdings PLC | 213.11 | 21.26 | 36.32 | 1.88% | $0.17 | $1.02 | 12.14% |
| Analog Devices Inc | 62.98 | 3.57 | 11.87 | 1.5% | $1.33 | $1.79 | 24.57% |
| NXP Semiconductors NV | 27.03 | 5.98 | 4.78 | 4.71% | $0.92 | $1.56 | -6.43% |
| Monolithic Power Systems Inc | 23.32 | 12.55 | 16.95 | 4.01% | $0.18 | $0.37 | 30.97% |
| STMicroelectronics NV | 60.21 | 1.35 | 2.23 | -0.05% | $0.62 | $0.65 | -14.42% |
| Credo Technology Group Holding Ltd | 201.31 | 32.09 | 44.93 | 8.67% | $0.07 | $0.15 | 273.57% |
| ASE Technology Holding Co Ltd | 23.09 | 2.57 | 1.23 | 2.49% | $26.99 | $25.69 | 7.5% |
| First Solar Inc | 19.06 | 2.80 | 5.52 | 4.09% | $0.49 | $0.5 | 8.58% |
| ON Semiconductor Corp | 47.40 | 2.56 | 3.30 | 2.13% | $0.38 | $0.55 | -15.36% |
| United Microelectronics Corp | 13.52 | 1.68 | 2.35 | 2.45% | $24.98 | $16.88 | 3.45% |
| Skyworks Solutions Inc | 31.62 | 2.08 | 3.13 | 1.81% | $0.23 | $0.4 | 6.57% |
| Rambus Inc | 47.75 | 8.83 | 16.94 | 4.85% | $0.08 | $0.14 | 30.33% |
| Lattice Semiconductor Corp | 313.30 | 14.36 | 20.34 | 0.42% | $0.02 | $0.08 | -0.08% |
| Average | 71.94 | 8.8 | 12.52 | 4.14% | $40.01 | $32.78 | 26.43% |
By conducting an in-depth analysis of NVIDIA, we can identify the following trends:
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The Price to Earnings ratio of 50.62 is 0.7x lower than the industry average, indicating potential undervaluation for the stock.
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The elevated Price to Book ratio of 43.21 relative to the industry average by 4.91x suggests company might be overvalued based on its book value.
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With a relatively high Price to Sales ratio of 26.52, which is 2.12x the industry average, the stock might be considered overvalued based on sales performance.
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The Return on Equity (ROE) of 28.72% is 24.58% above the industry average, highlighting 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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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 is experiencing remarkable revenue growth, with a rate of 55.6%, outperforming the industry average of 26.43%.
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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Compared to its top 4 peers, NVIDIA has a stronger financial position indicated by its lower debt-to-equity ratio of 0.11.
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This suggests that the company relies less on debt financing and has a more favorable balance between debt and equity, which can be seen as a positive attribute by investors.
Key Takeaways
For NVIDIA, the PE ratio is low compared to peers, indicating potential undervaluation. The high PB and PS ratios suggest strong market sentiment and revenue multiples. The high ROE reflects efficient use of shareholder equity, while the low EBITDA may indicate room for operational improvement. The high gross profit margin and revenue growth rate outperform industry peers, highlighting strong financial performance.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
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