In today's rapidly changing and highly competitive business world, it is vital for investors and industry enthusiasts to carefully assess companies. In this article, we will perform a comprehensive industry comparison, evaluating NVIDIA (NASDAQ:NVDA) against its key competitors in the Semiconductors & Semiconductor Equipment industry. By analyzing important 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 | 45.78 | 37.81 | 24.30 | 29.14% | $38.75 | $41.85 | 62.49% |
| Broadcom Inc | 104.18 | 26.18 | 32.80 | 5.8% | $8.29 | $10.7 | 22.03% |
| Taiwan Semiconductor Manufacturing Co Ltd | 31.23 | 9.82 | 13.52 | 9.44% | $691.11 | $588.54 | 30.31% |
| Advanced Micro Devices Inc | 116.03 | 5.94 | 11.30 | 2.06% | $2.11 | $4.78 | 35.59% |
| Micron Technology Inc | 33.26 | 5.24 | 7.60 | 6.1% | $5.9 | $5.05 | 46.0% |
| Intel Corp | 675 | 1.82 | 3.34 | 3.98% | $7.85 | $5.22 | 2.78% |
| Qualcomm Inc | 35.13 | 8.89 | 4.39 | -12.88% | $3.51 | $6.24 | 10.03% |
| Texas Instruments Inc | 32.70 | 9.81 | 9.52 | 8.21% | $2.24 | $2.72 | 14.24% |
| ARM Holdings PLC | 181.96 | 20.33 | 34.29 | 3.3% | $0.22 | $1.11 | 34.48% |
| Analog Devices Inc | 60.58 | 4 | 12.45 | 2.32% | $1.47 | $1.94 | 25.91% |
| Marvell Technology Inc | 31.30 | 5.36 | 9.91 | 13.84% | $2.58 | $1.07 | 36.83% |
| NXP Semiconductors NV | 28.19 | 5.71 | 4.82 | 6.43% | $1.11 | $1.79 | -2.37% |
| Monolithic Power Systems Inc | 24.70 | 12.93 | 17.42 | 5.12% | $0.21 | $0.41 | 18.88% |
| ASE Technology Holding Co Ltd | 32.14 | 3.43 | 1.75 | 3.56% | $32.4 | $28.88 | 5.29% |
| Credo Technology Group Holding Ltd | 146.80 | 23.92 | 40.85 | 7.99% | $0.09 | $0.18 | 272.08% |
| First Solar Inc | 19.45 | 3.02 | 5.39 | 5.19% | $0.61 | $0.61 | 79.67% |
| ON Semiconductor Corp | 75.66 | 2.81 | 3.73 | 3.22% | $0.44 | $0.59 | -11.98% |
| STMicroelectronics NV | 44.72 | 1.29 | 2.05 | 1.33% | $0.31 | $1.06 | -1.97% |
| United Microelectronics Corp | 14.93 | 1.76 | 2.64 | 4.29% | $30.07 | $17.62 | -2.25% |
| Tower Semiconductor Ltd | 71.68 | 4.89 | 9.28 | 1.9% | $0.13 | $0.09 | 6.79% |
| Rambus Inc | 49.86 | 8.75 | 16.79 | 3.84% | $0.08 | $0.14 | 22.68% |
| Lattice Semiconductor Corp | 389.75 | 15.09 | 21.76 | 0.4% | $0.01 | $0.09 | 4.92% |
| Average | 104.73 | 8.62 | 12.65 | 4.07% | $37.65 | $32.33 | 30.95% |
Through an analysis of NVIDIA, we can infer the following trends:
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The stock's Price to Earnings ratio of 45.78 is lower than the industry average by 0.44x, suggesting potential value in the eyes of market participants.
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With a Price to Book ratio of 37.81, which is 4.39x the industry average, NVIDIA might be considered overvalued in terms of its book value, as it is trading at a higher multiple compared to its industry peers.
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The Price to Sales ratio of 24.3, which is 1.92x the industry average, suggests the stock could potentially be overvalued in relation to its sales performance compared to its peers.
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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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With higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $38.75 Billion, which is 1.03x above the industry average, the company demonstrates stronger profitability and robust cash flow generation.
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With higher gross profit of $41.85 Billion, which indicates 1.29x above the industry average, the company demonstrates stronger profitability and higher earnings from its core operations.
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The company's revenue growth of 62.49% is notably higher compared to the industry average of 30.95%, showcasing exceptional sales performance and strong demand for its products or services.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio is a measure that indicates the level of debt a company has taken on relative to the value of its assets net of liabilities.
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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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
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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