In today's rapidly changing and highly competitive business world, it is imperative for investors and industry observers to carefully assess companies before making investment choices. In this article, we will undertake a comprehensive industry comparison, evaluating NVIDIA NVDA vis-à-vis its key competitors in the Semiconductors & Semiconductor Equipment industry. Through a detailed analysis of important financial indicators, market standing, and growth potential, our goal is to provide valuable insights and highlight 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. 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 | 76.51 | 65.45 | 40.87 | 32.31% | $17.75 | $20.41 | 262.12% |
| Taiwan Semiconductor Manufacturing Co Ltd | 33.83 | 8.10 | 13.11 | 6.38% | $428.26 | $314.51 | 16.52% |
| Broadcom Inc | 74.74 | 11.54 | 18.30 | 3.02% | $5.58 | $7.78 | 42.99% |
| Advanced Micro Devices Inc | 234.46 | 4.65 | 11.58 | 0.22% | $0.9 | $2.56 | 2.24% |
| Qualcomm Inc | 28.73 | 9.83 | 6.67 | 9.79% | $3.08 | $5.28 | 1.23% |
| Texas Instruments Inc | 30.02 | 10.33 | 10.51 | 6.52% | $1.77 | $2.1 | -16.4% |
| ARM Holdings PLC | 554.34 | 31.81 | 51.94 | 4.35% | $0.06 | $0.89 | 46.6% |
| Intel Corp | 31.57 | 1.23 | 2.35 | -0.36% | $2.09 | $5.22 | 8.61% |
| Analog Devices Inc | 53.60 | 3.23 | 10.97 | 0.85% | $0.93 | $1.18 | -33.83% |
| Microchip Technology Inc | 25.58 | 7.18 | 6.39 | 2.25% | $0.47 | $0.79 | -40.62% |
| Monolithic Power Systems Inc | 98.37 | 19.01 | 22.05 | 4.45% | $0.1 | $0.25 | 1.51% |
| STMicroelectronics NV | 10.43 | 2.15 | 2.33 | 3.04% | $1.06 | $1.44 | -18.41% |
| ON Semiconductor Corp | 13.80 | 3.58 | 3.68 | 5.7% | $0.71 | $0.85 | -4.95% |
| GLOBALFOUNDRIES Inc | 31.66 | 2.50 | 4 | 1.19% | $0.54 | $0.39 | -15.86% |
| First Solar Inc | 27.26 | 4.03 | 7.84 | 3.48% | $0.36 | $0.35 | 44.83% |
| ASE Technology Holding Co Ltd | 23.70 | 2.82 | 1.42 | 1.94% | $23.55 | $20.87 | 1.46% |
| United Microelectronics Corp | 13.20 | 1.91 | 3.20 | 2.9% | $24.0 | $16.9 | 0.78% |
| Skyworks Solutions Inc | 19.93 | 2.67 | 3.75 | 2.91% | $0.31 | $0.42 | -9.29% |
| Universal Display Corp | 45.06 | 6.62 | 16.16 | 3.86% | $0.07 | $0.13 | 26.67% |
| Lattice Semiconductor Corp | 38.31 | 12.04 | 12.01 | 2.15% | $0.03 | $0.1 | -23.6% |
| MACOM Technology Solutions Holdings Inc | 118 | 7.24 | 11.90 | 1.45% | $0.04 | $0.1 | 6.98% |
| Cirrus Logic Inc | 25.48 | 3.67 | 3.91 | 2.48% | $0.07 | $0.19 | -0.27% |
| Average | 72.96 | 7.44 | 10.67 | 3.27% | $23.52 | $18.2 | 1.77% |
Through a thorough examination of NVIDIA, we can discern the following trends:
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The current Price to Earnings ratio of 76.51 is 1.05x higher than the industry average, indicating the stock is priced at a premium level according to the market sentiment.
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With a Price to Book ratio of 65.45, which is 8.8x 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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With a relatively high Price to Sales ratio of 40.87, which is 3.83x the industry average, the stock might be considered overvalued based on sales performance.
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With a Return on Equity (ROE) of 32.31% that is 29.04% 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 $17.75 Billion, which is 0.75x 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 $20.41 Billion, which indicates 1.12x above the industry average, indicating stronger profitability and higher earnings from its core operations.
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The company's revenue growth of 262.12% is notably higher compared to the industry average of 1.77%, 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.
By considering the Debt-to-Equity ratio, NVIDIA can be compared to its top 4 peers, leading to the following observations:
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NVIDIA is in a relatively stronger financial position compared to its top 4 peers, as evidenced by its lower debt-to-equity ratio of 0.23.
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This implies that the company relies less on debt financing and has a more favorable balance between debt and equity.
Key Takeaways
For NVIDIA, the PE, PB, and PS ratios are all high compared to industry peers, indicating a potentially overvalued stock. On the other hand, the high ROE, gross profit margin, and revenue growth suggest strong financial performance and market position within the Semiconductors & Semiconductor Equipment industry. However, the low EBITDA may indicate lower operational efficiency compared to competitors.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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