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 | 53.07 | 45.29 | 27.80 | 28.72% | $31.94 | $33.85 | 55.6% |
| Broadcom Inc | 90.80 | 22.82 | 28.59 | 5.8% | $8.29 | $10.7 | 22.03% |
| Advanced Micro Devices Inc | 151.45 | 6.88 | 13.94 | 1.48% | $0.72 | $3.06 | 31.71% |
| Micron Technology Inc | 28.86 | 4.54 | 6.59 | 6.1% | $5.9 | $5.05 | 46.0% |
| Qualcomm Inc | 16.31 | 6.70 | 4.36 | 9.71% | $3.52 | $5.76 | 10.35% |
| Intel Corp | 1276 | 1.72 | 3.15 | 3.98% | $0.47 | $3.54 | 6.17% |
| ARM Holdings PLC | 258.61 | 25.80 | 44.08 | 1.88% | $0.17 | $1.02 | 12.14% |
| Texas Instruments Inc | 30.81 | 9.24 | 8.97 | 8.21% | $2.24 | $2.72 | 14.24% |
| Analog Devices Inc | 60.56 | 3.44 | 11.41 | 1.5% | $1.33 | $1.79 | 24.57% |
| NXP Semiconductors NV | 26.12 | 5.77 | 4.62 | 4.71% | $0.92 | $1.56 | -6.43% |
| Monolithic Power Systems Inc | 28.12 | 15.13 | 20.44 | 4.01% | $0.18 | $0.37 | 30.97% |
| ASE Technology Holding Co Ltd | 26.56 | 2.96 | 1.42 | 2.49% | $26.99 | $25.69 | 7.5% |
| Credo Technology Group Holding Ltd | 216.04 | 34.44 | 48.21 | 8.67% | $0.07 | $0.15 | 273.57% |
| First Solar Inc | 20.63 | 3.03 | 5.98 | 4.09% | $0.49 | $0.5 | 8.58% |
| STMicroelectronics NV | 42.86 | 1.24 | 1.96 | 1.33% | $0.64 | $1.06 | -1.97% |
| ON Semiconductor Corp | 48.30 | 2.61 | 3.36 | 2.13% | $0.38 | $0.55 | -15.36% |
| United Microelectronics Corp | 13.89 | 1.73 | 2.42 | 2.45% | $24.98 | $16.88 | 3.45% |
| Rambus Inc | 49.96 | 9.24 | 17.73 | 4.85% | $0.08 | $0.14 | 30.33% |
| Skyworks Solutions Inc | 29.50 | 1.94 | 2.92 | 1.81% | $0.23 | $0.4 | 6.57% |
| Average | 134.19 | 8.85 | 12.79 | 4.18% | $4.31 | $4.5 | 28.02% |
Upon a comprehensive analysis of NVIDIA, the following trends can be discerned:
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At 53.07, the stock's Price to Earnings ratio is 0.4x less than the industry average, suggesting favorable growth potential.
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The elevated Price to Book ratio of 45.29 relative to the industry average by 5.12x suggests company might be overvalued based on its book value.
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The stock's relatively high Price to Sales ratio of 27.8, surpassing the industry average by 2.17x, 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 24.54% above the industry average, it appears that the company exhibits efficient use of equity to generate profits.
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The Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $31.94 Billion is 7.41x above the industry average, highlighting stronger profitability and robust cash flow generation.
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The gross profit of $33.85 Billion is 7.52x above that of its industry, highlighting stronger profitability and higher earnings from its core operations.
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The company's revenue growth of 55.6% exceeds the industry average of 28.02%, indicating strong sales performance and market outperformance.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio helps evaluate the capital structure and financial leverage of a company.
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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Among its top 4 peers, NVIDIA has a stronger financial position with a lower debt-to-equity ratio of 0.11.
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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, the PE ratio is low compared to peers, indicating potential undervaluation. The high PB and PS ratios suggest strong market sentiment and revenue multiples. In terms of ROE, EBITDA, gross profit, and revenue growth, NVIDIA outperforms industry peers, reflecting strong financial performance and growth prospects.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
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