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 | 55.21 | 47.12 | 28.92 | 28.72% | $31.94 | $33.85 | 55.6% |
| Broadcom Inc | 91.08 | 22.89 | 28.67 | 5.8% | $8.29 | $10.7 | 22.03% |
| Advanced Micro Devices Inc | 135.54 | 6.93 | 13.20 | 2.06% | $2.11 | $4.78 | 35.59% |
| Micron Technology Inc | 32.27 | 5.08 | 7.37 | 6.1% | $5.9 | $5.05 | 46.0% |
| Qualcomm Inc | 35.26 | 8.92 | 4.41 | -12.88% | $3.51 | $6.24 | 10.03% |
| Intel Corp | 631.50 | 1.70 | 3.12 | 3.98% | $7.85 | $5.22 | 2.78% |
| ARM Holdings PLC | 190.71 | 21.31 | 35.94 | 3.3% | $0.22 | $1.11 | 34.48% |
| Texas Instruments Inc | 29.71 | 8.91 | 8.65 | 8.21% | $2.24 | $2.72 | 14.24% |
| Analog Devices Inc | 61.44 | 3.48 | 11.58 | 1.5% | $1.33 | $1.79 | 24.57% |
| NXP Semiconductors NV | 25.23 | 5.11 | 4.32 | 6.43% | $1.11 | $1.79 | -2.37% |
| Monolithic Power Systems Inc | 24.59 | 12.87 | 17.34 | 5.12% | $0.21 | $0.41 | 18.88% |
| ASE Technology Holding Co Ltd | 29.98 | 3.20 | 1.63 | 3.56% | $32.4 | $28.88 | 5.29% |
| First Solar Inc | 20.53 | 3.18 | 5.69 | 5.19% | $0.61 | $0.61 | 79.67% |
| Credo Technology Group Holding Ltd | 222.69 | 35.50 | 49.70 | 8.67% | $0.07 | $0.15 | 273.57% |
| STMicroelectronics NV | 41.38 | 1.20 | 1.89 | 1.33% | $0.31 | $1.06 | -1.97% |
| ON Semiconductor Corp | 67.49 | 2.55 | 3.33 | 3.22% | $0.38 | $0.55 | 5.6% |
| United Microelectronics Corp | 13.28 | 1.56 | 2.35 | 4.29% | $30.07 | $17.62 | -2.25% |
| Tower Semiconductor Ltd | 61.51 | 4.19 | 7.97 | 1.9% | $0.13 | $0.09 | 6.79% |
| Rambus Inc | 48.67 | 8.54 | 16.39 | 3.84% | $0.08 | $0.14 | 22.68% |
| Skyworks Solutions Inc | 22.55 | 1.79 | 2.64 | 2.48% | $0.25 | $0.45 | 7.34% |
| Average | 93.97 | 8.36 | 11.9 | 3.37% | $5.11 | $4.7 | 31.73% |
After examining NVIDIA, the following trends can be inferred:
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With a Price to Earnings ratio of 55.21, which is 0.59x less than the industry average, the stock shows potential for growth at a reasonable price, making it an interesting consideration for market participants.
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The elevated Price to Book ratio of 47.12 relative to the industry average by 5.64x suggests company might be overvalued based on its book value.
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The stock's relatively high Price to Sales ratio of 28.92, surpassing the industry average by 2.43x, may indicate an aspect of overvaluation in terms of sales performance.
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The company has a higher Return on Equity (ROE) of 28.72%, which is 25.35% above the industry average. This suggests efficient use of equity to generate profits and demonstrates profitability and growth potential.
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With higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $31.94 Billion, which is 6.25x above the industry average, the company demonstrates stronger profitability and robust cash flow generation.
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The company has higher gross profit of $33.85 Billion, which indicates 7.2x above the industry average, indicating stronger profitability and higher earnings from its core operations.
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With a revenue growth of 55.6%, which surpasses the industry average of 31.73%, the company is demonstrating robust sales expansion and gaining market share.
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.
In light of the Debt-to-Equity ratio, a comparison between NVIDIA and its top 4 peers reveals the following information:
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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
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, EBITDA, gross profit, and revenue growth suggest that NVIDIA is performing well financially and experiencing strong 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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