In today's fast-paced and competitive business landscape, it is essential for investors and industry enthusiasts to thoroughly analyze companies before making investment decisions. 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 | 43.32 | 35.78 | 22.99 | 29.14% | $38.75 | $41.85 | 62.49% |
| Broadcom Inc | 75.46 | 20.91 | 27.34 | 11.02% | $8.29 | $10.7 | 12.93% |
| Taiwan Semiconductor Manufacturing Co Ltd | 29.97 | 9.43 | 12.97 | 9.44% | $691.11 | $588.54 | 30.31% |
| Advanced Micro Devices Inc | 110.36 | 5.64 | 10.74 | 2.06% | $2.11 | $4.78 | 35.59% |
| Micron Technology Inc | 31.77 | 5.01 | 7.26 | 6.1% | $5.9 | $5.05 | 46.0% |
| Qualcomm Inc | 35.59 | 9 | 4.45 | -12.88% | $3.51 | $6.24 | 10.03% |
| Intel Corp | 630.17 | 1.70 | 3.12 | 3.98% | $7.85 | $5.22 | 2.78% |
| Texas Instruments Inc | 32.68 | 9.80 | 9.51 | 8.21% | $2.24 | $2.72 | 14.24% |
| ARM Holdings PLC | 167.81 | 18.75 | 31.62 | 3.3% | $0.22 | $1.11 | 34.48% |
| Analog Devices Inc | 61.25 | 4.04 | 12.59 | 2.32% | $1.47 | $1.94 | 25.91% |
| Marvell Technology Inc | 29.73 | 5.09 | 9.41 | 13.84% | $2.58 | $1.07 | 36.83% |
| NXP Semiconductors NV | 28.20 | 5.72 | 4.83 | 6.43% | $1.11 | $1.79 | -2.37% |
| Monolithic Power Systems Inc | 24.28 | 12.71 | 17.12 | 5.12% | $0.21 | $0.41 | 18.88% |
| ASE Technology Holding Co Ltd | 31.63 | 3.37 | 1.72 | 3.56% | $32.4 | $28.88 | 5.29% |
| First Solar Inc | 19.55 | 3.03 | 5.42 | 5.19% | $0.61 | $0.61 | 79.67% |
| Credo Technology Group Holding Ltd | 124.06 | 20.21 | 34.52 | 7.99% | $0.09 | $0.18 | 272.08% |
| STMicroelectronics NV | 44.83 | 1.29 | 2.05 | 1.33% | $0.31 | $1.06 | -1.97% |
| ON Semiconductor Corp | 75.29 | 2.80 | 3.71 | 3.22% | $0.44 | $0.59 | -11.98% |
| United Microelectronics Corp | 14.49 | 1.71 | 2.56 | 4.29% | $30.07 | $17.62 | -2.25% |
| Tower Semiconductor Ltd | 68.75 | 4.69 | 8.91 | 1.9% | $0.13 | $0.09 | 6.79% |
| Lattice Semiconductor Corp | 378.10 | 14.64 | 21.11 | 0.4% | $0.01 | $0.09 | 4.92% |
| Rambus Inc | 44.87 | 7.87 | 15.11 | 3.84% | $0.08 | $0.14 | 22.68% |
| Average | 98.04 | 7.97 | 11.72 | 4.32% | $37.65 | $32.33 | 30.52% |
Upon closer analysis of NVIDIA, the following trends become apparent:
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A Price to Earnings ratio of 43.32 significantly below the industry average by 0.44x suggests undervaluation. This can make the stock appealing for those seeking growth.
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With a Price to Book ratio of 35.78, which is 4.49x 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 22.99, which is 1.96x 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 24.82% above the industry average. This suggests efficient use of equity to generate profits and demonstrates profitability and growth potential.
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The company has higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $38.75 Billion, which is 1.03x above the industry average, indicating 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 30.52%, the company is demonstrating robust sales expansion and gaining market share.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio gauges the extent to which a company has financed its operations through debt relative to 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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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. In terms of ROE, EBITDA, gross profit, and revenue growth, NVIDIA outperforms industry peers, reflecting robust financial performance and growth prospects in the semiconductor sector.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
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