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In-Depth Analysis: NVIDIA Versus Competitors In Semiconductors & Semiconductor Equipment Industry
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 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 | 43.99 | 36.33 | 23.35 | 29.14% | $38.75 | $41.85 | 62.49% |
| Broadcom Inc | 71.55 | 19.83 | 25.93 | 11.02% | $8.29 | $10.7 | 12.93% |
| Taiwan Semiconductor Manufacturing Co Ltd | 29.67 | 9.33 | 12.84 | 9.44% | $691.11 | $588.54 | 30.31% |
| Advanced Micro Devices Inc | 109.51 | 5.60 | 10.66 | 2.06% | $2.11 | $4.78 | 35.59% |
| Micron Technology Inc | 30.63 | 4.83 | 7 | 6.1% | $5.9 | $5.05 | 46.0% |
| Qualcomm Inc | 35.15 | 8.89 | 4.39 | -12.88% | $3.51 | $6.24 | 10.03% |
| Intel Corp | 621.83 | 1.67 | 3.08 | 3.98% | $7.85 | $5.22 | 2.78% |
| Texas Instruments Inc | 32.34 | 9.70 | 9.41 | 8.21% | $2.24 | $2.72 | 14.24% |
| Analog Devices Inc | 61.05 | 4.03 | 12.55 | 2.32% | $1.47 | $1.94 | 25.91% |
| ARM Holdings PLC | 155.26 | 17.35 | 29.26 | 3.3% | $0.22 | $1.11 | 34.48% |
| Marvell Technology Inc | 29.60 | 5.07 | 9.37 | 13.84% | $2.58 | $1.07 | 36.83% |
| NXP Semiconductors NV | 28.40 | 5.76 | 4.86 | 6.43% | $1.11 | $1.79 | -2.37% |
| Monolithic Power Systems Inc | 24.41 | 12.77 | 17.21 | 5.12% | $0.21 | $0.41 | 18.88% |
| ASE Technology Holding Co Ltd | 30.94 | 3.30 | 1.68 | 3.56% | $32.4 | $28.88 | 5.29% |
| First Solar Inc | 19.84 | 3.08 | 5.50 | 5.19% | $0.61 | $0.61 | 79.67% |
| Credo Technology Group Holding Ltd | 120.98 | 19.71 | 33.67 | 7.99% | $0.09 | $0.18 | 272.08% |
| STMicroelectronics NV | 44.72 | 1.29 | 2.05 | 1.33% | $0.31 | $1.06 | -1.97% |
| ON Semiconductor Corp | 74.74 | 2.78 | 3.69 | 3.22% | $0.44 | $0.59 | -11.98% |
| United Microelectronics Corp | 14.64 | 1.72 | 2.59 | 4.29% | $30.07 | $17.62 | -2.25% |
| Tower Semiconductor Ltd | 66.31 | 4.52 | 8.59 | 1.9% | $0.13 | $0.09 | 6.79% |
| Lattice Semiconductor Corp | 372.50 | 14.43 | 20.80 | 0.4% | $0.01 | $0.09 | 4.92% |
| Rambus Inc | 45.09 | 7.91 | 15.18 | 3.84% | $0.08 | $0.14 | 22.68% |
| Average | 96.15 | 7.79 | 11.44 | 4.32% | $37.65 | $32.33 | 30.52% |
By thoroughly analyzing NVIDIA, we can discern the following trends:
The stock's Price to Earnings ratio of 43.99 is lower than the industry average by 0.46x, 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 36.33 which exceeds the industry average by 4.66x.
With a relatively high Price to Sales ratio of 23.35, which is 2.04x the industry average, the stock might be considered overvalued based on sales performance.
With a Return on Equity (ROE) of 29.14% that is 24.82% above the industry average, it appears that the company exhibits efficient use of equity to generate profits.
The company has higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $38.75 Billion, which is 1.03x above the industry average, indicating stronger profitability and robust cash flow generation.
With higher gross profit of $41.85 Billion, which indicates 1.29x above the industry average, the company demonstrates stronger profitability and higher earnings from its core operations.
The company is experiencing remarkable revenue growth, with a rate of 62.49%, outperforming the industry average of 30.52%.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio is a financial metric that helps determine the level of financial risk associated with a company's capital structure.
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 can be assessed by comparing it to its top 4 peers, resulting in the following observations:
Among its top 4 peers, NVIDIA has a stronger financial position with a lower debt-to-equity ratio of 0.09.
This indicates that the company relies less on debt financing and maintains a more favorable balance between debt and equity, which can be viewed positively by investors.
Key Takeaways
For NVIDIA in the Semiconductors & Semiconductor Equipment industry, the PE, PB, and PS ratios indicate that the stock is relatively undervalued compared to its peers. On the other hand, the high ROE, EBITDA, gross profit, and revenue growth suggest that NVIDIA is performing exceptionally well in terms of profitability and growth within the industry sector.
This article was generated by Benzinga's automated content engine and reviewed by an editor.