In the ever-evolving and intensely competitive business landscape, conducting a thorough company analysis is of utmost importance for investors and industry followers. In this article, we will carry out an in-depth industry comparison, assessing NVIDIA (NASDAQ:NVDA) alongside its primary competitors in the Semiconductors & Semiconductor Equipment industry. By meticulously examining key financial metrics, market positioning, and growth prospects, we aim to offer valuable insights to 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 | 45.49 | 37.57 | 24.14 | 29.14% | $38.75 | $41.85 | 62.49% |
| Broadcom Inc | 105.89 | 26.61 | 33.34 | 5.8% | $8.29 | $10.7 | 22.03% |
| Taiwan Semiconductor Manufacturing Co Ltd | 31.92 | 10.04 | 13.82 | 9.44% | $691.11 | $588.54 | 30.31% |
| Advanced Micro Devices Inc | 115.93 | 5.93 | 11.29 | 2.06% | $2.11 | $4.78 | 35.59% |
| Micron Technology Inc | 34.74 | 5.48 | 7.94 | 6.1% | $5.9 | $5.05 | 46.0% |
| Qualcomm Inc | 36.37 | 9.20 | 4.55 | -12.88% | $3.51 | $6.24 | 10.03% |
| Intel Corp | 679.67 | 1.83 | 3.36 | 3.98% | $7.85 | $5.22 | 2.78% |
| Texas Instruments Inc | 33.09 | 9.93 | 9.63 | 8.21% | $2.24 | $2.72 | 14.24% |
| ARM Holdings PLC | 181.44 | 20.27 | 34.19 | 3.3% | $0.22 | $1.11 | 34.48% |
| Analog Devices Inc | 61.75 | 4.08 | 12.69 | 2.32% | $1.47 | $1.94 | 25.91% |
| Marvell Technology Inc | 32.56 | 5.58 | 10.31 | 13.84% | $2.58 | $1.07 | 36.83% |
| NXP Semiconductors NV | 28.53 | 5.78 | 4.88 | 6.43% | $1.11 | $1.79 | -2.37% |
| Monolithic Power Systems Inc | 25.12 | 13.15 | 17.71 | 5.12% | $0.21 | $0.41 | 18.88% |
| ASE Technology Holding Co Ltd | 33.07 | 3.53 | 1.80 | 3.56% | $32.4 | $28.88 | 5.29% |
| First Solar Inc | 20.13 | 3.12 | 5.58 | 5.19% | $0.61 | $0.61 | 79.67% |
| Credo Technology Group Holding Ltd | 136.19 | 22.19 | 37.90 | 7.99% | $0.09 | $0.18 | 272.08% |
| STMicroelectronics NV | 45.38 | 1.31 | 2.08 | 1.33% | $0.31 | $1.06 | -1.97% |
| ON Semiconductor Corp | 75.48 | 2.80 | 3.72 | 3.22% | $0.44 | $0.59 | -11.98% |
| United Microelectronics Corp | 14.77 | 1.74 | 2.61 | 4.29% | $30.07 | $17.62 | -2.25% |
| Tower Semiconductor Ltd | 73.14 | 4.99 | 9.47 | 1.9% | $0.13 | $0.09 | 6.79% |
| Rambus Inc | 50.88 | 8.93 | 17.13 | 3.84% | $0.08 | $0.14 | 22.68% |
| Lattice Semiconductor Corp | 392.25 | 15.19 | 21.90 | 0.4% | $0.01 | $0.09 | 4.92% |
| Average | 105.16 | 8.65 | 12.66 | 4.07% | $37.65 | $32.33 | 30.95% |
By closely examining NVIDIA, we can identify the following trends:
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A Price to Earnings ratio of 45.49 significantly below the industry average by 0.43x suggests undervaluation. This can make the stock appealing for those seeking growth.
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The elevated Price to Book ratio of 37.57 relative to the industry average by 4.34x suggests company might be overvalued based on its book value.
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The Price to Sales ratio of 24.14, which is 1.91x the industry average, suggests the stock could potentially be overvalued in relation to its sales performance compared to its peers.
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With a Return on Equity (ROE) of 29.14% that is 25.07% above the industry average, it appears that the company exhibits efficient use of equity to generate profits.
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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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With a revenue growth of 62.49%, which surpasses the industry average of 30.95%, the company is demonstrating robust sales expansion and gaining market share.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio measures the financial leverage of a company by evaluating its debt relative to its equity.
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 evaluating NVIDIA alongside its top 4 peers in terms of the Debt-to-Equity ratio, the following insights arise:
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NVIDIA exhibits a stronger financial position compared to its top 4 peers in the sector, as indicated by its lower debt-to-equity ratio of 0.09.
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This suggests that the company has a more favorable balance between debt and equity, which can be seen as a positive aspect for 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. In terms of ROE, EBITDA, gross profit, and revenue growth, NVIDIA outperforms industry peers, reflecting strong financial performance and growth prospects.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
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