In today's rapidly changing and fiercely competitive business landscape, it is essential for investors and industry enthusiasts to thoroughly analyze companies. In this article, we will conduct a comprehensive industry comparison, evaluating NVIDIA 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 | 60.74 | 51.96 | 32.45 | 32.31% | $17.75 | $20.41 | 17.83% |
| Taiwan Semiconductor Manufacturing Co Ltd | 30.20 | 7.23 | 11.70 | 6.38% | $428.26 | $314.51 | 16.52% |
| Broadcom Inc | 51.78 | 9.19 | 15.65 | 2.81% | $4.61 | $7.38 | 34.17% |
| Advanced Micro Devices Inc | 232.51 | 4.61 | 11.48 | 0.22% | $0.9 | $2.56 | -11.27% |
| Qualcomm Inc | 26.90 | 9.20 | 6.25 | 9.79% | $3.08 | $5.28 | 1.23% |
| Texas Instruments Inc | 30.73 | 10.58 | 10.76 | 6.52% | $1.77 | $2.1 | -16.4% |
| Intel Corp | 31.01 | 1.21 | 2.31 | -0.36% | $1.83 | $5.22 | -17.41% |
| ARM Holdings PLC | 388.03 | 22.11 | 36.36 | 4.35% | $0.06 | $0.89 | 12.62% |
| Analog Devices Inc | 54.80 | 3.30 | 11.21 | 0.85% | $0.93 | $1.18 | -33.83% |
| Microchip Technology Inc | 28.20 | 7.97 | 7.04 | 2.25% | $0.39 | $0.79 | -24.91% |
| STMicroelectronics NV | 10.69 | 2.20 | 2.38 | 3.04% | $1.06 | $1.44 | -18.41% |
| Monolithic Power Systems Inc | 88.96 | 17.19 | 19.94 | 4.45% | $0.1 | $0.25 | 1.51% |
| ON Semiconductor Corp | 14.62 | 3.79 | 3.90 | 5.7% | $0.71 | $0.85 | -4.95% |
| GLOBALFOUNDRIES Inc | 31.36 | 2.49 | 3.96 | 1.19% | $0.54 | $0.39 | -15.86% |
| First Solar Inc | 26.19 | 3.87 | 7.53 | 5.38% | $0.36 | $0.35 | 15.58% |
| ASE Technology Holding Co Ltd | 22.11 | 2.63 | 1.32 | 1.94% | $23.55 | $20.87 | 1.46% |
| United Microelectronics Corp | 12.65 | 1.83 | 3.07 | 2.9% | $24.0 | $16.9 | 0.78% |
| Skyworks Solutions Inc | 17.18 | 2.30 | 3.23 | 2.91% | $0.31 | $0.42 | -9.29% |
| Lattice Semiconductor Corp | 47.45 | 14.91 | 14.88 | 2.15% | $0.03 | $0.1 | -23.6% |
| Universal Display Corp | 37.90 | 5.57 | 13.59 | 3.86% | $0.07 | $0.13 | 26.67% |
| MACOM Technology Solutions Holdings Inc | 113.97 | 6.99 | 11.49 | 1.45% | $0.04 | $0.1 | 6.98% |
| Cirrus Logic Inc | 23.28 | 3.39 | 3.57 | 2.48% | $0.05 | $0.19 | -39.93% |
| Average | 62.88 | 6.79 | 9.6 | 3.35% | $23.46 | $18.19 | -4.68% |
Upon a comprehensive analysis of NVIDIA, the following trends can be discerned:
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A Price to Earnings ratio of 60.74 significantly below the industry average by 0.97x suggests undervaluation. This can make the stock appealing for those seeking growth.
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The elevated Price to Book ratio of 51.96 relative to the industry average by 7.65x suggests company might be overvalued based on its book value.
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The stock's relatively high Price to Sales ratio of 32.45, surpassing the industry average by 3.38x, 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 32.31%, which is 28.96% above the industry average. This suggests efficient use of equity to generate profits and demonstrates profitability and growth potential.
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With lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $17.75 Billion, which is 0.76x below the industry average, the company may face lower profitability or financial challenges.
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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 17.83% exceeds the industry average of -4.68%, indicating strong sales performance and market outperformance.
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 examining NVIDIA in comparison to its top 4 peers with respect to the Debt-to-Equity ratio, the following information becomes apparent:
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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 0.22.
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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 ratio is low compared to peers, indicating potential undervaluation. The high PB and PS ratios suggest strong market sentiment and premium valuation. In terms of ROE, NVIDIA outperforms peers, reflecting efficient use of shareholder equity. The low EBITDA implies lower operating profitability compared to industry peers. The high gross profit margin indicates strong pricing power, while the high revenue growth signifies robust top-line performance within the industry.
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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