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 | 43.64 | 36.04 | 23.16 | 29.14% | $38.75 | $41.85 | 62.49% |
| Broadcom Inc | 71.24 | 19.74 | 25.81 | 11.02% | $8.29 | $10.7 | 12.93% |
| Taiwan Semiconductor Manufacturing Co Ltd | 29.63 | 9.32 | 12.82 | 9.44% | $691.11 | $588.54 | 30.31% |
| Advanced Micro Devices Inc | 108.68 | 5.56 | 10.58 | 2.06% | $2.11 | $4.78 | 35.59% |
| Micron Technology Inc | 31.29 | 4.93 | 7.15 | 6.1% | $5.9 | $5.05 | 46.0% |
| Qualcomm Inc | 35.78 | 9.05 | 4.47 | -12.88% | $3.51 | $6.24 | 10.03% |
| Intel Corp | 625.17 | 1.68 | 3.09 | 3.98% | $7.85 | $5.22 | 2.78% |
| Texas Instruments Inc | 32.42 | 9.73 | 9.43 | 8.21% | $2.24 | $2.72 | 14.24% |
| Analog Devices Inc | 61.50 | 4.06 | 12.64 | 2.32% | $1.47 | $1.94 | 25.91% |
| ARM Holdings PLC | 159.45 | 17.82 | 30.05 | 3.3% | $0.22 | $1.11 | 34.48% |
| Marvell Technology Inc | 29.67 | 5.08 | 9.39 | 13.84% | $2.58 | $1.07 | 36.83% |
| NXP Semiconductors NV | 28.66 | 5.81 | 4.90 | 6.43% | $1.11 | $1.79 | -2.37% |
| Monolithic Power Systems Inc | 24.36 | 12.75 | 17.18 | 5.12% | $0.21 | $0.41 | 18.88% |
| ASE Technology Holding Co Ltd | 31.37 | 3.35 | 1.70 | 3.56% | $32.4 | $28.88 | 5.29% |
| First Solar Inc | 19.64 | 3.05 | 5.45 | 5.19% | $0.61 | $0.61 | 79.67% |
| Credo Technology Group Holding Ltd | 122.43 | 19.95 | 34.07 | 7.99% | $0.09 | $0.18 | 272.08% |
| STMicroelectronics NV | 45.62 | 1.32 | 2.09 | 1.33% | $0.31 | $1.06 | -1.97% |
| ON Semiconductor Corp | 75.47 | 2.80 | 3.72 | 3.22% | $0.44 | $0.59 | -11.98% |
| United Microelectronics Corp | 14.48 | 1.71 | 2.56 | 4.29% | $30.07 | $17.62 | -2.25% |
| Tower Semiconductor Ltd | 68.28 | 4.65 | 8.84 | 1.9% | $0.13 | $0.09 | 6.79% |
| Lattice Semiconductor Corp | 380.30 | 14.73 | 21.24 | 0.4% | $0.01 | $0.09 | 4.92% |
| Rambus Inc | 45.46 | 7.98 | 15.31 | 3.84% | $0.08 | $0.14 | 22.68% |
| Average | 97.19 | 7.86 | 11.55 | 4.32% | $37.65 | $32.33 | 30.52% |
By closely examining NVIDIA, we can identify the following trends:
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A Price to Earnings ratio of 43.64 significantly below the industry average by 0.45x suggests undervaluation. This can make the stock appealing for those seeking growth.
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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 36.04 which exceeds the industry average by 4.59x.
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The Price to Sales ratio of 23.16, which is 2.01x 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 Return on Equity (ROE) of 29.14% is 24.82% above the industry average, highlighting efficient use of equity to generate profits.
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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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Compared to its industry, 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 30.52%.
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.
By considering the Debt-to-Equity ratio, NVIDIA can be compared to its top 4 peers, leading to the following observations:
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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 in the Semiconductors & Semiconductor Equipment industry, the PE, PB, and PS ratios indicate that the stock is relatively undervalued compared to its peers. In terms of ROE, EBITDA, gross profit, and revenue growth, NVIDIA outperforms its industry counterparts, showcasing strong financial health and growth potential.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
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