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Wall Street JournalMarket Analysis: NVIDIA And Competitors In Semiconductors & Semiconductor Equipment Industry
In today's rapidly changing and fiercely competitive business landscape, it is vital for investors and industry enthusiasts to carefully evaluate companies. In this article, we will perform a comprehensive industry comparison, evaluating NVIDIA (NASDAQ:NVDA) against its key competitors in the Semiconductors & Semiconductor Equipment industry. By analyzing important 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 | 44.80 | 37 | 23.77 | 29.14% | $38.75 | $41.85 | 62.49% |
| Broadcom Inc | 71.35 | 19.85 | 25.85 | 11.02% | $9.86 | $12.25 | 28.18% |
| Taiwan Semiconductor Manufacturing Co Ltd | 30.18 | 9.49 | 13.07 | 9.44% | $691.11 | $588.54 | 30.31% |
| Advanced Micro Devices Inc | 111.74 | 5.72 | 10.88 | 2.06% | $2.11 | $4.78 | 35.59% |
| Micron Technology Inc | 25.28 | 5.09 | 7.10 | 9.28% | $8.35 | $7.65 | 56.65% |
| Qualcomm Inc | 34.98 | 8.85 | 4.37 | -12.88% | $3.51 | $6.24 | 10.03% |
| Intel Corp | 613.67 | 1.65 | 3.04 | 3.98% | $7.85 | $5.22 | 2.78% |
| Texas Instruments Inc | 32.11 | 9.63 | 9.34 | 8.21% | $2.24 | $2.72 | 14.24% |
| Analog Devices Inc | 60.18 | 3.97 | 12.37 | 2.32% | $1.47 | $1.94 | 25.91% |
| ARM Holdings PLC | 146.19 | 16.33 | 27.55 | 3.3% | $0.22 | $1.11 | 34.48% |
| Marvell Technology Inc | 29.61 | 5.07 | 9.37 | 13.84% | $2.58 | $1.07 | 36.83% |
| NXP Semiconductors NV | 27.97 | 5.67 | 4.79 | 6.43% | $1.11 | $1.79 | -2.37% |
| Monolithic Power Systems Inc | 24.04 | 12.58 | 16.95 | 5.12% | $0.21 | $0.41 | 18.88% |
| ASE Technology Holding Co Ltd | 30.97 | 3.30 | 1.68 | 3.56% | $32.4 | $28.88 | 5.29% |
| First Solar Inc | 20.49 | 3.18 | 5.68 | 5.19% | $0.61 | $0.61 | 79.67% |
| Credo Technology Group Holding Ltd | 129.42 | 21.09 | 36.02 | 7.99% | $0.09 | $0.18 | 272.08% |
| ON Semiconductor Corp | 75.63 | 2.81 | 3.73 | 3.22% | $0.44 | $0.59 | -11.98% |
| STMicroelectronics NV | 44.52 | 1.28 | 2.04 | 1.33% | $0.31 | $1.06 | -1.97% |
| United Microelectronics Corp | 15.18 | 1.79 | 2.69 | 4.29% | $30.07 | $17.62 | -2.25% |
| Tower Semiconductor Ltd | 68.84 | 4.69 | 8.92 | 1.9% | $0.13 | $0.09 | 6.79% |
| Rambus Inc | 45.89 | 8.05 | 15.45 | 3.84% | $0.08 | $0.14 | 22.68% |
| Lattice Semiconductor Corp | 376.70 | 14.59 | 21.03 | 0.4% | $0.01 | $0.09 | 4.92% |
| Average | 95.95 | 7.84 | 11.52 | 4.47% | $37.85 | $32.52 | 31.75% |
By analyzing NVIDIA, we can infer the following trends:
With a Price to Earnings ratio of 44.8, which is 0.47x less than the industry average, the stock shows potential for growth at a reasonable price, making it an interesting consideration for market participants.
With a Price to Book ratio of 37.0, which is 4.72x 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.
With a relatively high Price to Sales ratio of 23.77, which is 2.06x the industry average, the stock might be considered overvalued based on sales performance.
The Return on Equity (ROE) of 29.14% is 24.67% above the industry average, highlighting efficient use of equity to generate profits.
Compared to its industry, the company has higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $38.75 Billion, which is 1.02x 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.
With a revenue growth of 62.49%, which surpasses the industry average of 31.75%, the company is demonstrating robust sales expansion and gaining market share.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio measures the financial leverage of a company by evaluating its debt relative to its 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 examining NVIDIA in comparison to its top 4 peers with respect to the Debt-to-Equity ratio, the following information becomes apparent:
NVIDIA has a stronger financial position compared to its top 4 peers, as evidenced 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 perceived as a positive indicator 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 operational efficiency within the industry sector.
This article was generated by Benzinga's automated content engine and reviewed by an editor.