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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 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 | 51.29 | 43.77 | 26.87 | 28.72% | $31.94 | $33.85 | 55.6% |
| Broadcom Inc | 88.24 | 22.18 | 27.78 | 5.8% | $8.29 | $10.7 | 22.03% |
| Taiwan Semiconductor Manufacturing Co Ltd | 32.61 | 10.28 | 13.85 | 8.71% | $684.78 | $547.37 | 38.65% |
| Advanced Micro Devices Inc | 130.59 | 5.93 | 12.02 | 1.48% | $0.72 | $3.06 | 31.71% |
| Micron Technology Inc | 24.65 | 3.88 | 5.63 | 6.1% | $5.9 | $5.05 | 46.0% |
| ARM Holdings PLC | 254.79 | 25.42 | 43.43 | 1.88% | $0.17 | $1.02 | 12.14% |
| Qualcomm Inc | 15.61 | 6.41 | 4.17 | 9.71% | $3.52 | $5.76 | 10.35% |
| Texas Instruments Inc | 31.80 | 9.64 | 9.57 | 7.85% | $2.09 | $2.58 | 16.38% |
| Analog Devices Inc | 59.90 | 3.40 | 11.29 | 1.5% | $1.33 | $1.79 | 24.57% |
| NXP Semiconductors NV | 25.76 | 5.69 | 4.56 | 4.71% | $0.92 | $1.56 | -6.43% |
| Monolithic Power Systems Inc | 25.33 | 13.63 | 18.41 | 4.01% | $0.18 | $0.37 | 30.97% |
| STMicroelectronics NV | 41.06 | 1.42 | 2.19 | -0.05% | $0.62 | $0.65 | -14.42% |
| ASE Technology Holding Co Ltd | 23.10 | 2.57 | 1.23 | 2.49% | $26.99 | $25.69 | 7.5% |
| First Solar Inc | 19.18 | 2.82 | 5.56 | 4.09% | $0.49 | $0.5 | 8.58% |
| Credo Technology Group Holding Ltd | 180.21 | 28.73 | 40.22 | 8.67% | $0.07 | $0.15 | 273.57% |
| ON Semiconductor Corp | 47.18 | 2.55 | 3.28 | 2.13% | $0.38 | $0.55 | -15.36% |
| United Microelectronics Corp | 13.60 | 1.69 | 2.37 | 2.45% | $24.98 | $16.88 | 3.45% |
| Skyworks Solutions Inc | 28.99 | 1.91 | 2.87 | 1.81% | $0.23 | $0.4 | 6.57% |
| Rambus Inc | 44.94 | 8.31 | 15.95 | 4.85% | $0.08 | $0.14 | 30.33% |
| Average | 60.42 | 8.69 | 12.47 | 4.34% | $42.32 | $34.68 | 29.25% |
After thoroughly examining NVIDIA, the following trends can be inferred:
The stock's Price to Earnings ratio of 51.29 is lower than the industry average by 0.85x, suggesting potential value in the eyes of market participants.
It could be trading at a premium in relation to its book value, as indicated by its Price to Book ratio of 43.77 which exceeds the industry average by 5.04x.
The Price to Sales ratio of 26.87, which is 2.15x the industry average, suggests the stock could potentially be overvalued in relation to its sales performance compared to its peers.
The Return on Equity (ROE) of 28.72% is 24.38% above the industry average, highlighting efficient use of equity to generate profits.
Compared to its industry, the company has lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $31.94 Billion, which is 0.75x below the industry average, potentially indicating lower profitability or financial challenges.
With lower gross profit of $33.85 Billion, which indicates 0.98x below the industry average, the company may experience lower revenue after accounting for production costs.
With a revenue growth of 55.6%, which surpasses the industry average of 29.25%, the company is demonstrating robust sales expansion and gaining market share.
The debt-to-equity (D/E) ratio is a measure that indicates the level of debt a company has taken on relative to the value of its assets net of liabilities.
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 examining NVIDIA in comparison to its top 4 peers with respect to the Debt-to-Equity ratio, the following information becomes apparent:
In terms of the debt-to-equity ratio, NVIDIA has a lower level of debt compared to its top 4 peers, indicating a stronger financial position.
This implies that the company relies less on debt financing and has a more favorable balance between debt and equity with a lower debt-to-equity ratio of 0.11.
The PE, PB, and PS ratios for NVIDIA are indicating that the stock is relatively undervalued compared to its peers in the Semiconductors & Semiconductor Equipment industry. On the other hand, the high ROE, low EBITDA, low gross profit, and high revenue growth suggest that NVIDIA is performing well and has strong growth potential within the industry sector.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
Posted In: NVDA
