Market Analysis: NVIDIA And Competitors In Semiconductors & Semiconductor Equipment Industry
Amidst the fast-paced and highly competitive business environment of today, conducting comprehensive company analysis is essential for investors and industry enthusiasts. In this article, we will delve into an extensive industry comparison, evaluating NVIDIA (NASDAQ:NVDA) in comparison to its major competitors within the Semiconductors & Semiconductor Equipment industry. By analyzing critical 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 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 | 43.10 | 35.60 | 22.87 | 29.14% | $38.75 | $41.85 | 62.49% |
| Broadcom Inc | 69.16 | 19.16 | 25.06 | 11.02% | $8.29 | $10.7 | 12.93% |
| Taiwan Semiconductor Manufacturing Co Ltd | 29.74 | 9.35 | 12.87 | 9.44% | $691.11 | $588.54 | 30.31% |
| Advanced Micro Devices Inc | 105.27 | 5.38 | 10.25 | 2.06% | $2.11 | $4.78 | 35.59% |
| Micron Technology Inc | 23.63 | 4.76 | 6.63 | 9.28% | $5.9 | $5.05 | 20.57% |
| Qualcomm Inc | 34.77 | 8.80 | 4.35 | -12.88% | $3.51 | $6.24 | 10.03% |
| Intel Corp | 604.67 | 1.63 | 2.99 | 3.98% | $7.85 | $5.22 | 2.78% |
| Texas Instruments Inc | 32.09 | 9.63 | 9.34 | 8.21% | $2.24 | $2.72 | 14.24% |
| Analog Devices Inc | 60.29 | 3.98 | 12.39 | 2.32% | $1.47 | $1.94 | 25.91% |
| ARM Holdings PLC | 145.53 | 16.26 | 27.43 | 3.3% | $0.22 | $1.11 | 34.48% |
| Marvell Technology Inc | 29.74 | 5.10 | 9.42 | 13.84% | $2.58 | $1.07 | 36.83% |
| NXP Semiconductors NV | 27.45 | 5.56 | 4.70 | 6.43% | $1.11 | $1.79 | -2.37% |
| Monolithic Power Systems Inc | 23.85 | 12.48 | 16.82 | 5.12% | $0.21 | $0.41 | 18.88% |
| ASE Technology Holding Co Ltd | 30.38 | 3.24 | 1.65 | 3.56% | $32.4 | $28.88 | 5.29% |
| First Solar Inc | 20.09 | 3.12 | 5.57 | 5.19% | $0.61 | $0.61 | 79.67% |
| Credo Technology Group Holding Ltd | 119.46 | 19.46 | 33.24 | 7.99% | $0.09 | $0.18 | 272.08% |
| STMicroelectronics NV | 44.40 | 1.28 | 2.03 | 1.33% | $0.31 | $1.06 | -1.97% |
| ON Semiconductor Corp | 74.44 | 2.77 | 3.67 | 3.22% | $0.44 | $0.59 | -11.98% |
| United Microelectronics Corp | 15.12 | 1.78 | 2.68 | 4.29% | $30.07 | $17.62 | -2.25% |
| Tower Semiconductor Ltd | 67.46 | 4.60 | 8.74 | 1.9% | $0.13 | $0.09 | 6.79% |
| Lattice Semiconductor Corp | 365.15 | 14.14 | 20.39 | 0.4% | $0.01 | $0.09 | 4.92% |
| Rambus Inc | 43.57 | 7.64 | 14.67 | 3.84% | $0.08 | $0.14 | 22.68% |
| Average | 93.63 | 7.62 | 11.19 | 4.47% | $37.65 | $32.33 | 29.31% |
By carefully studying NVIDIA, we can deduce the following trends:
A Price to Earnings ratio of 43.1 significantly below the industry average by 0.46x suggests undervaluation. This can make the stock appealing for those seeking growth.
It could be trading at a premium in relation to its book value, as indicated by its Price to Book ratio of 35.6 which exceeds the industry average by 4.67x.
The Price to Sales ratio of 22.87, which is 2.04x 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 29.14% is 24.67% above the industry average, highlighting efficient use of equity to generate profits.
The company exhibits higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $38.75 Billion, which is 1.03x above the industry average, implying stronger profitability and robust cash flow generation.
The company has higher gross profit of $41.85 Billion, which indicates 1.29x above the industry average, indicating stronger profitability and higher earnings from its core operations.
The company's revenue growth of 62.49% is notably higher compared to the industry average of 29.31%, showcasing exceptional sales performance and strong demand for its products or services.
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.
By considering the Debt-to-Equity ratio, NVIDIA can be compared to its top 4 peers, leading to the following observations:
NVIDIA exhibits a stronger financial position compared to its top 4 peers in the sector, as indicated by its lower debt-to-equity ratio of 0.09.
This suggests that the company has a more favorable balance between debt and equity, which can be seen as a positive aspect for investors.
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 revenue multiples. The high ROE, EBITDA, gross profit, and revenue growth reflect robust financial performance and growth prospects within the industry. Comparing these ratios with peers in the Semiconductors & Semiconductor Equipment sector provides a comprehensive view of NVIDIA's valuation position.
This article was generated by Benzinga's automated content engine and reviewed by an editor.