Insights Into NVIDIA's Performance Versus Peers In Semiconductors & Semiconductor Equipment Sector
In today's fast-paced and competitive business landscape, it is essential for investors and industry enthusiasts to thoroughly analyze companies before making investment decisions. In this article, we will conduct a comprehensive industry comparison, evaluating NVIDIA (NASDAQ: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 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 | 46.16 | 38.12 | 24.50 | 29.14% | $38.75 | $41.85 | 62.49% |
| Broadcom Inc | 72.56 | 20.19 | 26.29 | 11.02% | $9.86 | $12.25 | 28.18% |
| Taiwan Semiconductor Manufacturing Co Ltd | 31.36 | 9.86 | 13.57 | 9.44% | $691.11 | $588.54 | 30.31% |
| Advanced Micro Devices Inc | 112.13 | 5.74 | 10.92 | 2.06% | $2.11 | $4.78 | 35.59% |
| Micron Technology Inc | 27.13 | 5.46 | 7.62 | 9.28% | $8.35 | $7.65 | 56.65% |
| Qualcomm Inc | 34.14 | 8.64 | 4.27 | -12.88% | $3.51 | $6.24 | 10.03% |
| Intel Corp | 615 | 1.65 | 3.04 | 3.98% | $7.85 | $5.22 | 2.78% |
| Texas Instruments Inc | 31.60 | 9.48 | 9.20 | 8.21% | $2.24 | $2.72 | 14.24% |
| Analog Devices Inc | 59.47 | 3.93 | 12.22 | 2.32% | $1.47 | $1.94 | 25.91% |
| ARM Holdings PLC | 140.14 | 15.66 | 26.41 | 3.3% | $0.22 | $1.11 | 34.48% |
| Marvell Technology Inc | 29.92 | 5.13 | 9.47 | 13.84% | $2.58 | $1.07 | 36.83% |
| NXP Semiconductors NV | 26.83 | 5.44 | 4.59 | 6.43% | $1.11 | $1.79 | -2.37% |
| Monolithic Power Systems Inc | 23.25 | 12.17 | 16.40 | 5.12% | $0.21 | $0.41 | 18.88% |
| ASE Technology Holding Co Ltd | 32.48 | 3.46 | 1.76 | 3.56% | $32.4 | $28.88 | 5.29% |
| First Solar Inc | 20.05 | 3.11 | 5.56 | 5.19% | $0.61 | $0.61 | 79.67% |
| Credo Technology Group Holding Ltd | 124.04 | 20.21 | 34.52 | 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 | 74.18 | 2.76 | 3.66 | 3.22% | $0.44 | $0.59 | -11.98% |
| United Microelectronics Corp | 14.54 | 1.71 | 2.57 | 4.29% | $30.07 | $17.62 | -2.25% |
| Tower Semiconductor Ltd | 67.87 | 4.63 | 8.79 | 1.9% | $0.13 | $0.09 | 6.79% |
| Lattice Semiconductor Corp | 367.90 | 14.25 | 20.54 | 0.4% | $0.01 | $0.09 | 4.92% |
| Rambus Inc | 43.76 | 7.68 | 14.73 | 3.84% | $0.08 | $0.14 | 22.68% |
| Average | 94.91 | 7.74 | 11.34 | 4.47% | $37.85 | $32.52 | 31.75% |
After a detailed analysis of NVIDIA, the following trends become apparent:
A Price to Earnings ratio of 46.16 significantly below the industry average by 0.49x suggests undervaluation. This can make the stock appealing for those seeking growth.
With a Price to Book ratio of 38.12, which is 4.93x 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.
The Price to Sales ratio of 24.5, which is 2.16x the industry average, suggests the stock could potentially be overvalued in relation to its sales performance compared to its peers.
With a Return on Equity (ROE) of 29.14% that is 24.67% above the industry average, it appears that the company exhibits efficient use of equity to generate profits.
The Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $38.75 Billion is 1.02x above the industry average, highlighting 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 31.75%, showcasing exceptional sales performance and strong demand for its products or services.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio is a key indicator of a company's financial health and its reliance on debt financing.
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 stands in comparison with its top 4 peers, leading to the following comparisons:
Compared to its top 4 peers, NVIDIA has a stronger financial position indicated by its lower debt-to-equity ratio of 0.09.
This suggests that the company relies less on debt financing and has a more favorable balance between debt and equity, which can be seen as a positive attribute by 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 highlight robust financial performance and growth prospects within the industry.
This article was generated by Benzinga's automated content engine and reviewed by an editor.