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Wall Street JournalComparative Study: NVIDIA And Industry Competitors In Semiconductors & Semiconductor Equipment Industry
In the ever-changing and fiercely competitive business landscape, conducting thorough company analysis is crucial for investors and industry experts. In this article, we will undertake a comprehensive industry comparison, evaluating NVIDIA (NASDAQ:NVDA) and its primary competitors in the Semiconductors & Semiconductor Equipment industry. By closely examining key financial metrics, market position, and growth prospects, our aim is 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 | 46.81 | 38.66 | 24.84 | 29.14% | $38.75 | $41.85 | 62.49% |
| Taiwan Semiconductor Manufacturing Co Ltd | 33.14 | 10.42 | 14.35 | 9.44% | $691.11 | $588.54 | 30.31% |
| Broadcom Inc | 72.01 | 20.03 | 26.09 | 11.02% | $9.86 | $12.25 | 28.18% |
| Micron Technology Inc | 32.28 | 6.50 | 9.06 | 9.28% | $8.35 | $7.65 | 56.65% |
| Advanced Micro Devices Inc | 109.96 | 5.62 | 10.71 | 2.06% | $2.11 | $4.78 | 35.59% |
| Intel Corp | 710.50 | 1.91 | 3.51 | 3.98% | $7.85 | $5.22 | 2.78% |
| Qualcomm Inc | 35.97 | 9.10 | 4.50 | -12.88% | $3.51 | $6.24 | 10.03% |
| Texas Instruments Inc | 33.83 | 10.15 | 9.84 | 8.21% | $2.24 | $2.72 | 14.24% |
| Analog Devices Inc | 64.23 | 4.24 | 13.20 | 2.32% | $1.47 | $1.94 | 25.91% |
| ARM Holdings PLC | 148.31 | 16.57 | 27.95 | 3.3% | $0.22 | $1.11 | 34.48% |
| Marvell Technology Inc | 29.80 | 5.11 | 9.44 | 13.84% | $2.58 | $1.07 | 36.83% |
| NXP Semiconductors NV | 29.58 | 6 | 5.06 | 6.43% | $1.11 | $1.79 | -2.37% |
| Monolithic Power Systems Inc | 24.60 | 12.88 | 17.35 | 5.12% | $0.21 | $0.41 | 18.88% |
| ASE Technology Holding Co Ltd | 35.83 | 3.82 | 1.95 | 3.56% | $32.4 | $28.88 | 5.29% |
| First Solar Inc | 18.50 | 2.87 | 5.13 | 5.19% | $0.61 | $0.61 | 79.67% |
| ON Semiconductor Corp | 84.78 | 3.15 | 4.18 | 3.22% | $0.44 | $0.59 | -11.98% |
| STMicroelectronics NV | 49.79 | 1.44 | 2.28 | 1.33% | $0.31 | $1.06 | -1.97% |
| Credo Technology Group Holding Ltd | 121.55 | 19.80 | 33.83 | 7.99% | $0.09 | $0.18 | 272.08% |
| United Microelectronics Corp | 16.66 | 1.96 | 2.95 | 4.29% | $30.07 | $17.62 | -2.25% |
| Tower Semiconductor Ltd | 70.65 | 4.83 | 9.15 | 1.9% | $0.13 | $0.09 | 6.79% |
| Lattice Semiconductor Corp | 415.10 | 16.08 | 23.18 | 0.4% | $0.01 | $0.09 | 4.92% |
| Rambus Inc | 43.64 | 7.66 | 14.69 | 3.84% | $0.08 | $0.14 | 22.68% |
| Average | 103.84 | 8.1 | 11.83 | 4.47% | $37.85 | $32.52 | 31.75% |
Through a meticulous analysis of NVIDIA, we can observe the following trends:
A Price to Earnings ratio of 46.81 significantly below the industry average by 0.45x 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 38.66 which exceeds the industry average by 4.77x.
The Price to Sales ratio of 24.84, which is 2.1x 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 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.
The gross profit of $41.85 Billion is 1.29x above that of its industry, highlighting 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 is a financial metric that helps determine the level of financial risk associated with a company's capital structure.
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 evaluating NVIDIA against its top 4 peers in terms of the Debt-to-Equity ratio, the following observations arise:
When comparing the debt-to-equity ratio, NVIDIA is in a stronger financial position compared to its top 4 peers.
The company has a lower level of debt relative to its equity, indicating a more favorable balance between the two with a lower debt-to-equity ratio of 0.09.
Key Takeaways
For NVIDIA in the Semiconductors & Semiconductor Equipment industry, the PE ratio is low compared to peers, indicating potential undervaluation. The PB and PS ratios are high, suggesting overvaluation relative to industry standards. In terms of ROE, EBITDA, gross profit, and revenue growth, NVIDIA outperforms its peers, reflecting strong financial performance and growth potential within the sector.
This article was generated by Benzinga's automated content engine and reviewed by an editor.