In today's rapidly changing and fiercely competitive business landscape, it is essential for investors and industry enthusiasts to thoroughly analyze companies. 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 | 54.18 | 46.24 | 28.38 | 28.72% | $31.94 | $33.85 | 55.6% |
| Broadcom Inc | 87.81 | 22.07 | 27.64 | 5.8% | $8.29 | $10.7 | 22.03% |
| Advanced Micro Devices Inc | 129.22 | 6.61 | 12.58 | 2.06% | $2.11 | $4.78 | 35.59% |
| Micron Technology Inc | 32.52 | 5.12 | 7.43 | 6.1% | $5.9 | $5.05 | 46.0% |
| Qualcomm Inc | 34.73 | 8.79 | 4.34 | -12.88% | $3.51 | $6.24 | 10.03% |
| Intel Corp | 592 | 1.59 | 2.93 | 3.98% | $7.85 | $5.22 | 2.78% |
| ARM Holdings PLC | 179.19 | 20.02 | 33.77 | 3.3% | $0.22 | $1.11 | 34.48% |
| Texas Instruments Inc | 29.02 | 8.71 | 8.45 | 8.21% | $2.24 | $2.72 | 14.24% |
| Analog Devices Inc | 59.77 | 3.39 | 11.26 | 1.5% | $1.33 | $1.79 | 24.57% |
| NXP Semiconductors NV | 24.36 | 4.94 | 4.17 | 6.43% | $1.11 | $1.79 | -2.37% |
| Monolithic Power Systems Inc | 23.61 | 12.36 | 16.65 | 5.12% | $0.21 | $0.41 | 18.88% |
| ASE Technology Holding Co Ltd | 29.31 | 3.13 | 1.59 | 3.56% | $32.4 | $28.88 | 5.29% |
| First Solar Inc | 19.42 | 3.01 | 5.39 | 5.19% | $0.61 | $0.61 | 79.67% |
| Credo Technology Group Holding Ltd | 202.11 | 32.22 | 45.11 | 8.67% | $0.07 | $0.15 | 273.57% |
| STMicroelectronics NV | 40.24 | 1.16 | 1.84 | 1.33% | $0.31 | $1.06 | -1.97% |
| ON Semiconductor Corp | 64.27 | 2.43 | 3.17 | 3.22% | $0.38 | $0.55 | 5.6% |
| United Microelectronics Corp | 13.14 | 1.54 | 2.32 | 4.29% | $30.07 | $17.62 | -2.25% |
| Tower Semiconductor Ltd | 57.39 | 3.91 | 7.43 | 1.9% | $0.13 | $0.09 | 6.79% |
| Rambus Inc | 45.36 | 7.96 | 15.27 | 3.84% | $0.08 | $0.14 | 22.68% |
| Skyworks Solutions Inc | 21.63 | 1.72 | 2.53 | 2.48% | $0.25 | $0.45 | 7.34% |
| Average | 88.69 | 7.93 | 11.26 | 3.37% | $5.11 | $4.7 | 31.73% |
Through a detailed examination of NVIDIA, we can deduce the following trends:
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With a Price to Earnings ratio of 54.18, which is 0.61x 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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It could be trading at a premium in relation to its book value, as indicated by its Price to Book ratio of 46.24 which exceeds the industry average by 5.83x.
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With a relatively high Price to Sales ratio of 28.38, which is 2.52x 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 25.35% above the industry average, highlighting efficient use of equity to generate profits.
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The company exhibits higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $31.94 Billion, which is 6.25x above the industry average, implying stronger profitability and robust cash flow generation.
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Compared to its industry, 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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The company is experiencing remarkable revenue growth, with a rate of 55.6%, outperforming the industry average of 31.73%.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio is a financial metric that helps determine the level of financial risk associated with a company's capital structure.
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 can be assessed by comparing it to its top 4 peers, resulting in the following observations:
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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 0.11, 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
For NVIDIA in the Semiconductors & Semiconductor Equipment industry, the PE, PB, and PS ratios indicate that the stock is relatively undervalued compared to its peers. However, the high ROE, EBITDA, gross profit, and revenue growth suggest that NVIDIA is performing exceptionally well in terms of profitability and operational efficiency within the industry sector.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
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