In the dynamic and cutthroat world of business, conducting thorough company analysis is essential for investors and industry experts. In this article, we will undertake a comprehensive industry comparison, evaluating NVIDIA (NASDAQ:NVDA) and its primary competitors in the Semiconductors & Semiconductor Equipment industry. By closely examining key financial metrics, market position, and growth prospects, our aim is 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 | 46.30 | 38.24 | 24.57 | 29.14% | $38.75 | $41.85 | 62.49% |
| Taiwan Semiconductor Manufacturing Co Ltd | 32.53 | 11.18 | 14.67 | 9.44% | $691.11 | $588.54 | 30.31% |
| Broadcom Inc | 71.91 | 20.01 | 26.06 | 11.02% | $9.86 | $12.25 | 28.18% |
| Micron Technology Inc | 32 | 6.44 | 8.98 | 9.28% | $8.35 | $7.65 | 56.65% |
| Advanced Micro Devices Inc | 119.33 | 6.10 | 11.62 | 2.06% | $2.11 | $4.78 | 35.59% |
| Intel Corp | 805.33 | 2.17 | 3.98 | 3.98% | $7.85 | $5.22 | 2.78% |
| Qualcomm Inc | 32.21 | 8.15 | 4.03 | -12.88% | $3.51 | $6.24 | 10.03% |
| Texas Instruments Inc | 34.45 | 10.33 | 10.03 | 8.21% | $2.24 | $2.72 | 14.24% |
| Analog Devices Inc | 66.25 | 4.37 | 13.62 | 2.32% | $1.47 | $1.94 | 25.91% |
| ARM Holdings PLC | 134.76 | 15.06 | 25.40 | 3.3% | $0.22 | $1.11 | 34.48% |
| Marvell Technology Inc | 28.30 | 4.85 | 8.96 | 13.84% | $2.58 | $1.07 | 36.83% |
| NXP Semiconductors NV | 29.49 | 5.98 | 5.05 | 6.43% | $1.11 | $1.79 | -2.37% |
| Monolithic Power Systems Inc | 25.90 | 13.56 | 18.26 | 5.12% | $0.21 | $0.41 | 18.88% |
| ASE Technology Holding Co Ltd | 39.05 | 4.16 | 2.12 | 3.56% | $32.4 | $28.88 | 5.29% |
| First Solar Inc | 18.70 | 2.90 | 5.19 | 5.19% | $0.61 | $0.61 | 79.67% |
| Credo Technology Group Holding Ltd | 128.55 | 20.94 | 35.77 | 7.99% | $0.09 | $0.18 | 272.08% |
| ON Semiconductor Corp | 82.58 | 3.07 | 4.07 | 3.22% | $0.44 | $0.59 | -11.98% |
| STMicroelectronics NV | 48.28 | 1.39 | 2.21 | 1.33% | $0.31 | $1.06 | -1.97% |
| United Microelectronics Corp | 16.37 | 1.93 | 2.90 | 4.29% | $30.07 | $17.62 | -2.25% |
| Tower Semiconductor Ltd | 71.68 | 4.90 | 9.28 | 1.9% | $0.13 | $0.09 | 6.79% |
| Lattice Semiconductor Corp | 426.15 | 16.50 | 23.80 | 0.4% | $0.01 | $0.09 | 4.92% |
| Rambus Inc | 49.08 | 8.61 | 16.52 | 3.84% | $0.08 | $0.14 | 22.68% |
| Average | 109.19 | 8.22 | 12.02 | 4.47% | $37.85 | $32.52 | 31.75% |
Upon a comprehensive analysis of NVIDIA, the following trends can be discerned:
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A Price to Earnings ratio of 46.3 significantly below the industry average by 0.42x 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 38.24 which exceeds the industry average by 4.65x.
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The stock's relatively high Price to Sales ratio of 24.57, surpassing the industry average by 2.04x, may indicate an aspect of overvaluation in terms of sales performance.
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With a Return on Equity (ROE) of 29.14% that is 24.67% above the industry average, it appears that the company exhibits efficient use of equity to generate profits.
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Compared to its industry, the company has higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $38.75 Billion, which is 1.02x 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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The company is experiencing remarkable revenue growth, with a rate of 62.49%, outperforming the industry average of 31.75%.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio helps evaluate the capital structure and financial leverage of a company.
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 assessing NVIDIA against its top 4 peers using the Debt-to-Equity ratio, the following comparisons can be made:
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NVIDIA has a stronger financial position compared to its top 4 peers, as evidenced 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 perceived as a positive indicator 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 reflect robust financial performance and growth prospects within the industry. Comparing these metrics with peers in the Semiconductors & Semiconductor Equipment sector highlights NVIDIA's competitive position and potential for further growth.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
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