Comparing NVIDIA With Industry Competitors In Semiconductors & Semiconductor Equipment Industry
In the fast-paced and cutthroat world of business, conducting thorough company analysis is essential for investors and industry experts. In this article, we will undertake a comprehensive industry comparison, evaluating NVIDIA (NASDAQ:NVDA) in comparison to its major competitors within the Semiconductors & Semiconductor Equipment industry. By analyzing crucial financial metrics, market position, and growth potential, our objective is to provide valuable insights for investors and offer a deeper understanding of 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 | 75.06 | 64.21 | 40.10 | 32.31% | $17.75 | $20.41 | 262.12% |
| Taiwan Semiconductor Manufacturing Co Ltd | 35.39 | 8.47 | 13.72 | 6.38% | $428.26 | $314.51 | 16.52% |
| Broadcom Inc | 74.50 | 11.51 | 18.24 | 3.02% | $5.58 | $7.78 | 42.99% |
| Advanced Micro Devices Inc | 237.54 | 4.71 | 11.73 | 0.22% | $0.9 | $2.56 | 2.24% |
| Qualcomm Inc | 27.17 | 9.30 | 6.31 | 9.79% | $3.08 | $5.28 | 1.23% |
| Texas Instruments Inc | 30.99 | 10.67 | 10.85 | 6.52% | $1.77 | $2.1 | -16.4% |
| ARM Holdings PLC | 580.14 | 33.29 | 54.35 | 4.35% | $0.06 | $0.89 | 46.6% |
| Intel Corp | 32.20 | 1.25 | 2.39 | -0.36% | $2.09 | $5.22 | 8.61% |
| Analog Devices Inc | 53.74 | 3.24 | 11 | 0.85% | $0.93 | $1.18 | -33.83% |
| Microchip Technology Inc | 26.89 | 7.55 | 6.72 | 2.25% | $0.47 | $0.79 | -40.62% |
| Monolithic Power Systems Inc | 100.03 | 19.33 | 22.42 | 4.45% | $0.1 | $0.25 | 1.51% |
| STMicroelectronics NV | 10.54 | 2.18 | 2.35 | 3.04% | $1.06 | $1.44 | -18.41% |
| ON Semiconductor Corp | 14.83 | 3.85 | 3.95 | 5.7% | $0.71 | $0.85 | -4.95% |
| GLOBALFOUNDRIES Inc | 31.52 | 2.49 | 3.98 | 1.19% | $0.54 | $0.39 | -15.86% |
| First Solar Inc | 24.23 | 3.58 | 6.97 | 3.48% | $0.36 | $0.35 | 44.83% |
| ASE Technology Holding Co Ltd | 22.79 | 2.71 | 1.36 | 1.94% | $23.55 | $20.87 | 1.46% |
| United Microelectronics Corp | 12.42 | 1.80 | 3.01 | 2.9% | $24.0 | $16.9 | 0.78% |
| Skyworks Solutions Inc | 19.70 | 2.64 | 3.71 | 2.91% | $0.31 | $0.42 | -9.29% |
| Universal Display Corp | 47.39 | 6.96 | 16.99 | 3.86% | $0.07 | $0.13 | 26.67% |
| Lattice Semiconductor Corp | 39.98 | 12.57 | 12.54 | 2.15% | $0.03 | $0.1 | -23.6% |
| MACOM Technology Solutions Holdings Inc | 125.75 | 7.72 | 12.68 | 1.45% | $0.04 | $0.1 | 6.98% |
| Cirrus Logic Inc | 26.24 | 3.78 | 4.03 | 2.48% | $0.07 | $0.19 | -0.27% |
| Average | 74.95 | 7.6 | 10.92 | 3.27% | $23.52 | $18.2 | 1.77% |
By analyzing NVIDIA, we can infer the following trends:
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Notably, the current Price to Earnings ratio for this stock, 75.06, is 1.0x above the industry norm, reflecting a higher valuation relative to the industry.
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It could be trading at a premium in relation to its book value, as indicated by its Price to Book ratio of 64.21 which exceeds the industry average by 8.45x.
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The Price to Sales ratio of 40.1, which is 3.67x the industry average, suggests the stock could potentially be overvalued in relation to its sales performance compared to its peers.
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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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The Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $17.75 Billion is 0.75x below the industry average, suggesting potential 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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With a revenue growth of 262.12%, which surpasses the industry average of 1.77%, the company is demonstrating robust sales expansion and gaining market share.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio gauges the extent to which a company has financed its operations through debt relative to 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.
When comparing NVIDIA with its top 4 peers based on the Debt-to-Equity ratio, the following insights can be observed:
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NVIDIA demonstrates a stronger financial position compared to its top 4 peers in the sector.
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With a lower debt-to-equity ratio of 0.23, the company relies less on debt financing and maintains a healthier balance between debt and equity, which can be viewed positively by investors.
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 profitability and growth potential, despite the low EBITDA. Overall, NVIDIA's financial performance is robust, but its current valuation may be a concern when compared to industry standards in the Semiconductors & Semiconductor Equipment sector.
This article was generated by Benzinga's automated content engine and reviewed by an editor.