In the dynamic and fiercely competitive business environment, conducting a thorough analysis of companies is crucial for investors and industry enthusiasts. In this article, we will perform an extensive industry comparison, evaluating NVIDIA (NASDAQ:NVDA) in relation to its major competitors in the Semiconductors & Semiconductor Equipment industry. By closely examining crucial financial metrics, market position, and growth prospects, we aim to offer 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 | 45.38 | 37.47 | 24.08 | 29.14% | $38.75 | $41.85 | 62.49% |
| Broadcom Inc | 68.93 | 19.18 | 24.98 | 11.02% | $9.86 | $12.25 | 28.18% |
| Micron Technology Inc | 36.99 | 7.45 | 10.38 | 9.28% | $8.35 | $7.65 | 56.65% |
| Advanced Micro Devices Inc | 130.79 | 6.69 | 12.73 | 2.06% | $2.11 | $4.78 | 35.59% |
| Intel Corp | 904.17 | 2.43 | 4.47 | 3.98% | $7.85 | $5.22 | 2.78% |
| Texas Instruments Inc | 35.41 | 10.62 | 10.31 | 8.21% | $2.24 | $2.72 | 14.24% |
| Qualcomm Inc | 31.21 | 7.90 | 3.90 | -12.88% | $3.51 | $6.24 | 10.03% |
| Analog Devices Inc | 66.88 | 4.42 | 13.75 | 2.32% | $1.47 | $1.94 | 25.91% |
| ARM Holdings PLC | 146.05 | 16.32 | 27.52 | 3.3% | $0.22 | $1.11 | 34.48% |
| Marvell Technology Inc | 29.07 | 4.98 | 9.20 | 13.84% | $2.58 | $1.07 | 36.83% |
| NXP Semiconductors NV | 28.89 | 5.86 | 4.94 | 6.43% | $1.11 | $1.79 | -2.37% |
| Monolithic Power Systems Inc | 27.58 | 14.43 | 19.45 | 5.12% | $0.21 | $0.41 | 18.88% |
| ASE Technology Holding Co Ltd | 38.67 | 4.12 | 2.10 | 3.56% | $32.4 | $28.88 | 5.29% |
| United Microelectronics Corp | 20.80 | 2.45 | 3.68 | 4.29% | $30.07 | $17.62 | -2.25% |
| ON Semiconductor Corp | 86.48 | 3.21 | 4.27 | 3.22% | $0.44 | $0.59 | -11.98% |
| First Solar Inc | 18.70 | 2.90 | 5.19 | 5.19% | $0.61 | $0.61 | 79.67% |
| STMicroelectronics NV | 49.17 | 1.42 | 2.25 | 1.33% | $0.31 | $1.06 | -1.97% |
| Credo Technology Group Holding Ltd | 119.97 | 19.55 | 33.39 | 7.99% | $0.09 | $0.18 | 272.08% |
| Tower Semiconductor Ltd | 77.13 | 5.27 | 9.99 | 1.9% | $0.13 | $0.09 | 6.79% |
| Rambus Inc | 59.97 | 10.52 | 20.19 | 3.84% | $0.08 | $0.14 | 22.68% |
| Lattice Semiconductor Corp | 425.60 | 16.48 | 23.76 | 0.4% | $0.01 | $0.09 | 4.92% |
| Average | 120.12 | 8.31 | 12.32 | 4.22% | $5.18 | $4.72 | 31.82% |
By analyzing NVIDIA, we can infer the following trends:
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At 45.38, the stock's Price to Earnings ratio is 0.38x less than the industry average, suggesting favorable growth potential.
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The elevated Price to Book ratio of 37.47 relative to the industry average by 4.51x suggests company might be overvalued based on its book value.
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The stock's relatively high Price to Sales ratio of 24.08, surpassing the industry average by 1.95x, may indicate an aspect of overvaluation in terms of sales performance.
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The Return on Equity (ROE) of 29.14% is 24.92% above the industry average, highlighting efficient use of equity to generate profits.
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The company exhibits higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $38.75 Billion, which is 7.48x above the industry average, implying stronger profitability and robust cash flow generation.
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With higher gross profit of $41.85 Billion, which indicates 8.87x 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 31.82%, 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.
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
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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