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 | 45.15 | 37.29 | 23.96 | 29.14% | $38.75 | $41.85 | 62.49% |
| Broadcom Inc | 100.06 | 25.15 | 31.50 | 5.8% | $8.29 | $10.7 | 22.03% |
| Taiwan Semiconductor Manufacturing Co Ltd | 30.53 | 9.60 | 13.21 | 9.44% | $691.11 | $588.54 | 30.31% |
| Advanced Micro Devices Inc | 114.12 | 5.84 | 11.11 | 2.06% | $2.11 | $4.78 | 35.59% |
| Micron Technology Inc | 31.25 | 4.93 | 7.14 | 6.1% | $5.9 | $5.05 | 46.0% |
| Intel Corp | 690.17 | 1.86 | 3.41 | 3.98% | $7.85 | $5.22 | 2.78% |
| Qualcomm Inc | 34.89 | 8.83 | 4.36 | -12.88% | $3.51 | $6.24 | 10.03% |
| Texas Instruments Inc | 33.25 | 9.98 | 9.68 | 8.21% | $2.24 | $2.72 | 14.24% |
| ARM Holdings PLC | 181.17 | 20.24 | 34.14 | 3.3% | $0.22 | $1.11 | 34.48% |
| Analog Devices Inc | 61.69 | 4.07 | 12.68 | 2.32% | $1.47 | $1.94 | 25.91% |
| Marvell Technology Inc | 34.83 | 5.97 | 11.03 | 13.84% | $2.58 | $1.07 | 36.83% |
| NXP Semiconductors NV | 28.18 | 5.71 | 4.82 | 6.43% | $1.11 | $1.79 | -2.37% |
| Monolithic Power Systems Inc | 24.71 | 12.93 | 17.43 | 5.12% | $0.21 | $0.41 | 18.88% |
| ASE Technology Holding Co Ltd | 30.81 | 3.29 | 1.67 | 3.56% | $32.4 | $28.88 | 5.29% |
| Credo Technology Group Holding Ltd | 151.76 | 24.73 | 42.23 | 7.99% | $0.09 | $0.18 | 272.08% |
| First Solar Inc | 19.77 | 3.07 | 5.48 | 5.19% | $0.61 | $0.61 | 79.67% |
| STMicroelectronics NV | 44.83 | 1.29 | 2.05 | 1.33% | $0.31 | $1.06 | -1.97% |
| ON Semiconductor Corp | 74.99 | 2.79 | 3.70 | 3.22% | $0.44 | $0.59 | -11.98% |
| United Microelectronics Corp | 14.90 | 1.75 | 2.64 | 4.29% | $30.07 | $17.62 | -2.25% |
| Tower Semiconductor Ltd | 65.90 | 4.49 | 8.54 | 1.9% | $0.13 | $0.09 | 6.79% |
| Rambus Inc | 48.38 | 8.49 | 16.29 | 3.84% | $0.08 | $0.14 | 22.68% |
| Lattice Semiconductor Corp | 394.25 | 15.27 | 22.01 | 0.4% | $0.01 | $0.09 | 4.92% |
| Average | 105.26 | 8.58 | 12.62 | 4.07% | $37.65 | $32.33 | 30.95% |
By conducting an in-depth analysis of NVIDIA, we can identify the following trends:
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The stock's Price to Earnings ratio of 45.15 is lower than the industry average by 0.43x, 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 37.29 which exceeds the industry average by 4.35x.
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The stock's relatively high Price to Sales ratio of 23.96, surpassing the industry average by 1.9x, 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 29.14%, which is 25.07% above the industry average. This suggests efficient use of equity to generate profits and demonstrates profitability and growth potential.
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The Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $38.75 Billion is 1.03x above the industry average, highlighting stronger profitability and robust cash flow generation.
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The company has higher gross profit of $41.85 Billion, which indicates 1.29x 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 62.49%, outperforming the industry average of 30.95%.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio is a key indicator of a company's financial health and its reliance on debt financing.
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 examining NVIDIA in comparison to its top 4 peers with respect to the Debt-to-Equity ratio, the following information becomes apparent:
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When considering the debt-to-equity ratio, NVIDIA exhibits a stronger financial position compared to its top 4 peers.
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This indicates that the company has a favorable balance between debt and equity, with a lower debt-to-equity ratio of 0.09, which can be perceived as a positive aspect 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, EBITDA, gross profit, and revenue growth highlight strong financial performance and growth prospects within the industry. Comparing these ratios with peers in the Semiconductors & Semiconductor Equipment sector provides a comprehensive view of NVIDIA's valuation position.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
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