In today's fast-paced and competitive business landscape, it is essential for investors and industry enthusiasts to thoroughly analyze companies before making investment decisions. In this article, we will conduct a comprehensive industry comparison, evaluating NVIDIA (NASDAQ:NVDA) against its key competitors in the Semiconductors & Semiconductor Equipment industry. By examining key financial metrics, market position, and growth prospects, we aim 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. 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 | 54.05 | 50.88 | 30.05 | 31.13% | $22.86 | $26.16 | 93.61% |
| Taiwan Semiconductor Manufacturing Co Ltd | 29.39 | 7.74 | 11.65 | 8.36% | $555.05 | $439.35 | 38.95% |
| Broadcom Inc | 133.07 | 11.72 | 16.31 | -2.77% | $6.39 | $8.36 | 47.27% |
| Advanced Micro Devices Inc | 121.88 | 3.92 | 9.27 | 1.36% | $1.55 | $3.42 | 17.57% |
| Texas Instruments Inc | 37.35 | 10.62 | 11.74 | 7.86% | $2.09 | $2.47 | -8.41% |
| Qualcomm Inc | 17.55 | 6.64 | 4.55 | 11.46% | $3.21 | $5.78 | 18.69% |
| ARM Holdings PLC | 226.03 | 23.90 | 41.09 | 1.83% | $0.11 | $0.81 | 4.71% |
| Micron Technology Inc | 145.43 | 2.51 | 4.53 | 1.99% | $3.63 | $2.74 | 93.27% |
| Analog Devices Inc | 66.78 | 3.09 | 11.59 | 1.11% | $1.04 | $1.31 | -24.84% |
| Microchip Technology Inc | 47.51 | 5.85 | 6.77 | 1.24% | $0.34 | $0.67 | -48.37% |
| ON Semiconductor Corp | 17.57 | 3.51 | 4.18 | 4.75% | $0.63 | $0.8 | -19.21% |
| Monolithic Power Systems Inc | 64.50 | 11.87 | 13.73 | 6.35% | $0.17 | $0.34 | 30.59% |
| STMicroelectronics NV | 10.52 | 1.31 | 1.69 | 1.98% | $0.74 | $1.23 | -26.63% |
| ASE Technology Holding Co Ltd | 19.37 | 2.22 | 1.17 | 3.16% | $28.59 | $26.43 | 3.85% |
| First Solar Inc | 16.57 | 2.71 | 5.37 | 4.22% | $0.45 | $0.45 | 10.81% |
| United Microelectronics Corp | 10.80 | 1.51 | 2.42 | 4.0% | $29.73 | $20.43 | 5.99% |
| Skyworks Solutions Inc | 23.38 | 2.18 | 3.34 | 0.95% | $0.18 | $0.43 | -15.9% |
| MACOM Technology Solutions Holdings Inc | 129.46 | 8.65 | 13.58 | 2.67% | $0.05 | $0.11 | 33.47% |
| Lattice Semiconductor Corp | 54.88 | 10.98 | 13.79 | 1.03% | $0.03 | $0.09 | -33.87% |
| Universal Display Corp | 32.49 | 4.84 | 11.98 | 4.29% | $0.08 | $0.13 | 14.57% |
| Average | 63.4 | 6.62 | 9.93 | 3.47% | $33.37 | $27.12 | 7.5% |
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By conducting a comprehensive analysis of NVIDIA, the following trends become evident:
With a Price to Earnings ratio of 54.05, which is 0.85x less than the industry average, the stock shows potential for growth at a reasonable price, making it an interesting consideration for market participants.
With a Price to Book ratio of 50.88, which is 7.69x 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.
The Price to Sales ratio of 30.05, which is 3.03x the industry average, suggests the stock could potentially be overvalued in relation to its sales performance compared to its peers.
With a Return on Equity (ROE) of 31.13% that is 27.66% above the industry average, it appears that the company exhibits efficient use of equity to generate profits.
The company has lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $22.86 Billion, which is 0.69x below the industry average. This potentially indicates lower profitability or financial challenges.
The gross profit of $26.16 Billion is 0.96x below that of its industry, suggesting potential lower revenue after accounting for production costs.
The company's revenue growth of 93.61% is notably higher compared to the industry average of 7.5%, showcasing exceptional sales performance and strong demand for its products or services.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio indicates the proportion of debt and equity used by a company to finance its assets and operations.
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 stands in comparison with its top 4 peers, leading to the following comparisons:
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 0.16.
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, 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 and gross profit may indicate operational challenges. The high revenue growth rate signals strong sales performance relative to industry peers in the Semiconductors & Semiconductor Equipment sector.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
