In today's rapidly evolving and fiercely competitive business landscape, it is crucial for investors and industry analysts to conduct comprehensive company evaluations. In this article, we will undertake an in-depth industry comparison, assessing NVIDIA (NASDAQ:NVDA) alongside its primary competitors in the Semiconductors & Semiconductor Equipment industry. By meticulously examining crucial financial indicators, market positioning, and growth potential, we aim to provide valuable insights to 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. 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 | 57.27 | 53.91 | 31.84 | 31.13% | $22.86 | $26.16 | 93.61% |
| Taiwan Semiconductor Manufacturing Co Ltd | 32.64 | 8.60 | 12.93 | 8.36% | $555.05 | $439.35 | 38.95% |
| Broadcom Inc | 137.70 | 12.13 | 16.88 | -2.77% | $6.39 | $8.36 | 47.27% |
| Advanced Micro Devices Inc | 125.10 | 4.03 | 9.51 | 1.36% | $1.55 | $3.42 | 17.57% |
| Qualcomm Inc | 17.94 | 6.78 | 4.65 | 11.46% | $3.21 | $5.78 | 18.69% |
| Texas Instruments Inc | 35.87 | 10.20 | 11.28 | 7.86% | $2.09 | $2.47 | -8.41% |
| ARM Holdings PLC | 228.06 | 24.12 | 41.46 | 1.83% | $0.11 | $0.81 | 4.71% |
| Micron Technology Inc | 144.10 | 2.49 | 4.49 | 1.99% | $3.63 | $2.74 | 93.27% |
| Analog Devices Inc | 65.41 | 3.03 | 11.35 | 1.36% | $1.12 | $1.42 | -10.06% |
| Microchip Technology Inc | 40.45 | 4.98 | 5.77 | 1.24% | $0.34 | $0.67 | -48.37% |
| ON Semiconductor Corp | 16.31 | 3.26 | 3.88 | 4.75% | $0.63 | $0.8 | -19.21% |
| Monolithic Power Systems Inc | 64.52 | 11.87 | 13.73 | 6.35% | $0.17 | $0.34 | 30.59% |
| STMicroelectronics NV | 10.67 | 1.33 | 1.71 | 1.98% | $0.74 | $1.23 | -26.63% |
| ASE Technology Holding Co Ltd | 19.66 | 2.25 | 1.18 | 3.16% | $28.59 | $26.43 | 3.85% |
| First Solar Inc | 17.05 | 2.79 | 5.53 | 4.22% | $0.45 | $0.45 | 10.81% |
| United Microelectronics Corp | 10.38 | 1.45 | 2.33 | 4.0% | $29.73 | $20.43 | 5.99% |
| Skyworks Solutions Inc | 23.42 | 2.18 | 3.34 | 0.95% | $0.18 | $0.43 | -15.9% |
| MACOM Technology Solutions Holdings Inc | 132.63 | 8.87 | 13.91 | 2.67% | $0.05 | $0.11 | 33.47% |
| Lattice Semiconductor Corp | 56.58 | 11.32 | 14.21 | 1.03% | $0.03 | $0.09 | -33.87% |
| Universal Display Corp | 31.48 | 4.69 | 11.60 | 4.29% | $0.08 | $0.13 | 14.57% |
| Average | 63.68 | 6.65 | 9.99 | 3.48% | $33.38 | $27.13 | 8.28% |
By thoroughly analyzing NVIDIA, we can discern the following trends:
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At 57.27, the stock's Price to Earnings ratio is 0.9x less than the industry average, suggesting favorable growth potential.
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With a Price to Book ratio of 53.91, which is 8.11x 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 31.84, surpassing the industry average by 3.19x, may indicate an aspect of overvaluation in terms of sales performance.
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The company has a higher Return on Equity (ROE) of 31.13%, which is 27.65% 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 lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $22.86 Billion, which is 0.68x below the industry average. This potentially indicates lower profitability or financial challenges.
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With lower gross profit of $26.16 Billion, which indicates 0.96x below the industry average, the company may experience lower revenue after accounting for production costs.
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The company's revenue growth of 93.61% is notably higher compared to the industry average of 8.28%, showcasing exceptional sales performance and strong demand for its products or services.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio measures the financial leverage of a company by evaluating its debt relative to its 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 comparing NVIDIA with its top 4 peers based on the Debt-to-Equity ratio, the following insights can be observed:
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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 0.16.
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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 reflects efficient use of shareholder equity. The low EBITDA and gross profit may indicate operational challenges. The high revenue growth signifies strong sales performance relative to industry peers in Semiconductors & Semiconductor Equipment.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
