In the ever-changing and fiercely competitive business landscape, conducting thorough company analysis is crucial for investors and industry experts. In this article, we will undertake a comprehensive industry comparison, evaluating NVIDIA (NASDAQ:NVDA) and its primary competitors in the Semiconductors & Semiconductor Equipment industry. By closely examining key financial metrics, market position, and growth prospects, our aim is 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 | 44.62 | 36.85 | 23.68 | 28.72% | $31.94 | $33.85 | 55.6% |
| Broadcom Inc | 101.94 | 25.62 | 32.09 | 5.8% | $8.29 | $10.7 | 22.03% |
| Taiwan Semiconductor Manufacturing Co Ltd | 30.09 | 9.46 | 13.03 | 9.44% | $691.11 | $588.54 | 30.31% |
| Advanced Micro Devices Inc | 112.17 | 5.74 | 10.92 | 2.06% | $2.11 | $4.78 | 35.59% |
| Micron Technology Inc | 30.34 | 4.78 | 6.93 | 6.1% | $5.9 | $5.05 | 46.0% |
| Qualcomm Inc | 32.96 | 8.34 | 4.12 | -12.88% | $3.51 | $6.24 | 10.03% |
| Intel Corp | 613.50 | 1.65 | 3.03 | 3.98% | $7.85 | $5.22 | 2.78% |
| Texas Instruments Inc | 30.12 | 9.04 | 8.77 | 8.21% | $2.24 | $2.72 | 14.24% |
| ARM Holdings PLC | 170.01 | 19 | 32.04 | 3.3% | $0.22 | $1.11 | 34.48% |
| Analog Devices Inc | 56.56 | 3.73 | 11.63 | 1.5% | $1.33 | $1.79 | 24.57% |
| NXP Semiconductors NV | 23.95 | 4.85 | 4.10 | 6.43% | $1.11 | $1.79 | -2.37% |
| Monolithic Power Systems Inc | 23.73 | 12.42 | 16.73 | 5.12% | $0.21 | $0.41 | 18.88% |
| ASE Technology Holding Co Ltd | 29.22 | 3.12 | 1.59 | 3.56% | $32.4 | $28.88 | 5.29% |
| First Solar Inc | 20.89 | 3.24 | 5.79 | 5.19% | $0.61 | $0.61 | 79.67% |
| Credo Technology Group Holding Ltd | 227.79 | 36.31 | 50.84 | 8.67% | $0.07 | $0.15 | 273.57% |
| ON Semiconductor Corp | 68 | 2.53 | 3.35 | 3.22% | $0.38 | $0.55 | 5.6% |
| STMicroelectronics NV | 39.05 | 1.13 | 1.79 | 1.33% | $0.31 | $1.06 | -1.97% |
| United Microelectronics Corp | 13.64 | 1.60 | 2.41 | 4.29% | $30.07 | $17.62 | -2.25% |
| Tower Semiconductor Ltd | 59.83 | 4.08 | 7.75 | 1.9% | $0.13 | $0.09 | 6.79% |
| Rambus Inc | 45.15 | 7.92 | 15.20 | 3.84% | $0.08 | $0.14 | 22.68% |
| Skyworks Solutions Inc | 21.21 | 1.69 | 2.48 | 2.48% | $0.25 | $0.45 | 7.34% |
| Average | 87.51 | 8.31 | 11.73 | 3.68% | $39.41 | $33.89 | 31.66% |
Through a detailed examination of NVIDIA, we can deduce the following trends:
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The stock's Price to Earnings ratio of 44.62 is lower than the industry average by 0.51x, suggesting potential value in the eyes of 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 36.85 which exceeds the industry average by 4.43x.
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With a relatively high Price to Sales ratio of 23.68, which is 2.02x the industry average, the stock might be considered overvalued based on sales performance.
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With a Return on Equity (ROE) of 28.72% that is 25.04% 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 0.81x below the industry average, suggesting potential lower profitability or financial challenges.
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Compared to its industry, the company has lower gross profit of $33.85 Billion, which indicates 1.0x below the industry average, potentially indicating lower revenue after accounting for production costs.
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With a revenue growth of 55.6%, which surpasses the industry average of 31.66%, the company is demonstrating robust sales expansion and gaining market share.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio is an important measure to assess the financial structure and risk profile 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.
By analyzing NVIDIA in relation to its top 4 peers based on the Debt-to-Equity ratio, the following insights can be derived:
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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, 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 and gross profit may indicate operational challenges. The high revenue growth rate signals strong top-line performance relative to industry peers in the Semiconductors & Semiconductor Equipment sector.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
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