In the fast-paced 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 NVDA in comparison to its major competitors within the Semiconductors & Semiconductor Equipment industry. By analyzing crucial 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 | 50.48 | 43.08 | 26.44 | 28.72% | $31.94 | $33.85 | 55.6% |
| Broadcom Inc | 92.21 | 23.18 | 29.03 | 5.8% | $8.29 | $10.7 | 22.03% |
| Taiwan Semiconductor Manufacturing Co Ltd | 28.23 | 8.91 | 11.99 | 8.71% | $684.78 | $547.37 | 38.65% |
| Advanced Micro Devices Inc | 93.22 | 4.23 | 8.58 | 1.48% | $0.72 | $3.06 | 31.71% |
| Qualcomm Inc | 15.59 | 6.40 | 4.17 | 9.71% | $3.52 | $5.76 | 10.35% |
| Micron Technology Inc | 27.13 | 3.32 | 5.04 | 3.79% | $4.33 | $3.51 | 36.56% |
| Texas Instruments Inc | 33.70 | 10.22 | 10.14 | 7.85% | $2.09 | $2.58 | 16.38% |
| ARM Holdings PLC | 234.39 | 23.39 | 39.95 | 1.88% | $0.17 | $1.02 | 12.14% |
| Analog Devices Inc | 63.17 | 3.58 | 11.90 | 1.5% | $1.33 | $1.79 | 24.57% |
| NXP Semiconductors NV | 26.60 | 5.88 | 4.71 | 4.71% | $0.92 | $1.56 | -6.43% |
| Monolithic Power Systems Inc | 21.99 | 11.83 | 15.98 | 4.01% | $0.18 | $0.37 | 30.97% |
| Credo Technology Group Holding Ltd | 221.28 | 35.27 | 49.38 | 8.67% | $0.07 | $0.15 | 273.57% |
| ASE Technology Holding Co Ltd | 22.44 | 2.50 | 1.20 | 2.49% | $26.99 | $25.69 | 7.5% |
| STMicroelectronics NV | 55.64 | 1.25 | 2.06 | -0.05% | $0.62 | $0.65 | -14.42% |
| First Solar Inc | 17.38 | 2.55 | 5.03 | 4.09% | $0.49 | $0.5 | 8.58% |
| ON Semiconductor Corp | 46.69 | 2.52 | 3.25 | 2.13% | $0.38 | $0.55 | -15.36% |
| United Microelectronics Corp | 12.32 | 1.53 | 2.14 | 2.45% | $24.98 | $16.88 | 3.45% |
| Skyworks Solutions Inc | 29.75 | 1.96 | 2.94 | 1.81% | $0.23 | $0.4 | 6.57% |
| Rambus Inc | 41.99 | 7.76 | 14.90 | 4.85% | $0.08 | $0.14 | 30.33% |
| Lattice Semiconductor Corp | 287.04 | 13.15 | 18.63 | 0.42% | $0.02 | $0.08 | -0.08% |
| Average | 72.15 | 8.92 | 12.69 | 4.02% | $40.01 | $32.78 | 27.21% |
By closely studying NVIDIA, we can observe the following trends:
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A Price to Earnings ratio of 50.48 significantly below the industry average by 0.7x suggests undervaluation. This can make the stock appealing for those seeking growth.
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With a Price to Book ratio of 43.08, which is 4.83x 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 stock’s relatively high Price to Sales ratio of 26.44, surpassing the industry average by 2.08x, may indicate an aspect of overvaluation in terms of sales performance.
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With a Return on Equity (ROE) of 28.72% that is 24.7% 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 lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $31.94 Billion, which is 0.8x below the industry average, potentially indicating lower profitability or financial challenges.
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Compared to its industry, the company has higher gross profit of $33.85 Billion, which indicates 1.03x above the industry average, indicating stronger profitability and higher earnings from its core operations.
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With a revenue growth of 55.6%, which surpasses the industry average of 27.21%, the company is demonstrating robust sales expansion and gaining market share.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio provides insights into the proportion of debt a company has in relation to its equity and asset value.
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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Among its top 4 peers, NVIDIA has a stronger financial position with a lower debt-to-equity ratio of 0.11.
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This indicates that the company relies less on debt financing and maintains a more favorable balance between debt and equity, which can be viewed positively 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. A high ROE reflects efficient use of shareholder funds, while low EBITDA may indicate lower cash generation. The high gross profit margin signifies strong profitability, and high revenue growth indicates a positive sales trend within the industry sector.
This article was generated by Benzinga’s automated content engine and reviewed by an editor.
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