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Wall Street JournalAssessing NVIDIA's Performance Against Competitors In Semiconductors & Semiconductor Equipment Industry
In today's fast-paced and highly competitive business world, it is crucial for investors and industry followers to conduct comprehensive company evaluations. In this article, we will delve into an extensive industry comparison, evaluating NVIDIA (NASDAQ:NVDA) in relation to its major competitors in the Semiconductors & Semiconductor Equipment industry. By closely examining key financial metrics, market standing, and growth prospects, our objective is to provide valuable insights and highlight 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 | 42.31 | 34.94 | 22.45 | 29.14% | $38.75 | $41.85 | 62.49% |
| Broadcom Inc | 68.35 | 18.94 | 24.77 | 11.02% | $8.29 | $10.7 | 12.93% |
| Taiwan Semiconductor Manufacturing Co Ltd | 28.65 | 9.01 | 12.40 | 9.44% | $691.11 | $588.54 | 30.31% |
| Advanced Micro Devices Inc | 103.72 | 5.31 | 10.10 | 2.06% | $2.11 | $4.78 | 35.59% |
| Micron Technology Inc | 21.44 | 4.32 | 6.02 | 6.1% | $5.9 | $5.05 | 46.0% |
| Qualcomm Inc | 34.40 | 8.70 | 4.30 | -12.88% | $3.51 | $6.24 | 10.03% |
| Intel Corp | 600.83 | 1.62 | 2.97 | 3.98% | $7.85 | $5.22 | 2.78% |
| Texas Instruments Inc | 31.78 | 9.54 | 9.25 | 8.21% | $2.24 | $2.72 | 14.24% |
| Analog Devices Inc | 59.44 | 3.92 | 12.22 | 2.32% | $1.47 | $1.94 | 25.91% |
| ARM Holdings PLC | 146.90 | 16.41 | 27.68 | 3.3% | $0.22 | $1.11 | 34.48% |
| Marvell Technology Inc | 28.77 | 4.93 | 9.11 | 13.84% | $2.58 | $1.07 | 36.83% |
| NXP Semiconductors NV | 27.59 | 5.59 | 4.72 | 6.43% | $1.11 | $1.79 | -2.37% |
| Monolithic Power Systems Inc | 23.40 | 12.25 | 16.50 | 5.12% | $0.21 | $0.41 | 18.88% |
| ASE Technology Holding Co Ltd | 29.84 | 3.18 | 1.62 | 3.56% | $32.4 | $28.88 | 5.29% |
| First Solar Inc | 19.50 | 3.02 | 5.41 | 5.19% | $0.61 | $0.61 | 79.67% |
| Credo Technology Group Holding Ltd | 115.63 | 18.84 | 32.18 | 7.99% | $0.09 | $0.18 | 272.08% |
| STMicroelectronics NV | 44.05 | 1.27 | 2.02 | 1.33% | $0.31 | $1.06 | -1.97% |
| ON Semiconductor Corp | 73.05 | 2.71 | 3.60 | 3.22% | $0.44 | $0.59 | -11.98% |
| United Microelectronics Corp | 14.84 | 1.75 | 2.63 | 4.29% | $30.07 | $17.62 | -2.25% |
| Tower Semiconductor Ltd | 65.05 | 4.43 | 8.43 | 1.9% | $0.13 | $0.09 | 6.79% |
| Lattice Semiconductor Corp | 359.30 | 13.91 | 20.06 | 0.4% | $0.01 | $0.09 | 4.92% |
| Rambus Inc | 43.15 | 7.57 | 14.53 | 3.84% | $0.08 | $0.14 | 22.68% |
| Average | 92.37 | 7.49 | 10.98 | 4.32% | $37.65 | $32.33 | 30.52% |
Through a detailed examination of NVIDIA, we can deduce the following trends:
With a Price to Earnings ratio of 42.31, which is 0.46x less than the industry average, the stock shows potential for growth at a reasonable price, making it an interesting consideration for market participants.
The elevated Price to Book ratio of 34.94 relative to the industry average by 4.66x suggests company might be overvalued based on its book value.
The stock's relatively high Price to Sales ratio of 22.45, surpassing the industry average by 2.04x, may indicate an aspect of overvaluation in terms of sales performance.
The company has a higher Return on Equity (ROE) of 29.14%, which is 24.82% above the industry average. This suggests efficient use of equity to generate profits and demonstrates profitability and growth potential.
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.
With a revenue growth of 62.49%, which surpasses the industry average of 30.52%, the company is demonstrating robust sales expansion and gaining market share.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio helps evaluate the capital structure and financial leverage of a company.
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:
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 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.