Investigating NVIDIA's Standing In Semiconductors & Semiconductor Equipment Industry Compared To Competitors

In today's rapidly evolving and fiercely competitive business landscape, it is crucial for investors and industry analysts to conduct comprehensive company evaluations. In this article, we will undertake an in-depth industry comparison, assessing NVIDIA (NASDAQ:NVDA) alongside its primary competitors in the Semiconductors & Semiconductor Equipment industry. By meticulously examining crucial financial indicators, market positioning, and growth potential, we aim to provide valuable insights to 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. 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	56.62	51.05	29.23	23.01%	$22.58	$26.67	69.18%
Broadcom Inc	108.55	20.10	25.17	7.12%	$8.02	$10.2	20.16%
Advanced Micro Devices Inc	129.52	4.97	10.45	1.23%	$1.59	$3.74	35.9%
Qualcomm Inc	16.54	6.42	4.31	10.3%	$3.67	$6.04	16.93%
Texas Instruments Inc	34.99	10.61	10.52	7.89%	$1.85	$2.31	9.31%
ARM Holdings PLC	217.96	25.32	43.37	3.17%	$0.46	$1.21	33.73%
Micron Technology Inc	20.17	2.47	3.75	3.79%	$4.33	$3.51	36.56%
Analog Devices Inc	62.70	3.27	11.72	1.63%	$1.2	$1.61	22.28%
Monolithic Power Systems Inc	19.32	10.61	14.75	4.17%	$0.18	$0.35	39.24%
ON Semiconductor Corp	40.54	3.04	3.76	-5.78%	$-0.37	$0.29	-22.39%
STMicroelectronics NV	38.46	1.34	2.05	-0.55%	$0.46	$0.93	-14.42%
ASE Technology Holding Co Ltd	20.42	2.16	1.11	2.39%	$27.16	$24.89	11.56%
First Solar Inc	15.45	2.38	4.59	2.59%	$0.35	$0.34	6.35%
Credo Technology Group Holding Ltd	377.38	27.56	45.39	5.63%	$0.04	$0.11	179.73%
United Microelectronics Corp	11.26	1.35	2.21	2.06%	$23.86	$15.45	5.91%
Skyworks Solutions Inc	28.09	1.82	2.93	1.11%	$0.22	$0.39	-8.87%
Qorvo Inc	99.96	2.28	2.19	0.93%	$0.11	$0.37	-7.6%
Rambus Inc	34.68	6.40	12.30	4.85%	$0.08	$0.13	3.33%
Lattice Semiconductor Corp	143.43	10.31	15.01	0.71%	$0.02	$0.08	-14.68%
Average	78.86	7.91	11.98	2.96%	$4.07	$4.0	19.61%

After examining NVIDIA, the following trends can be inferred:

• The Price to Earnings ratio of 56.62 is 0.72x lower than the industry average, indicating potential undervaluation for the stock.

• It could be trading at a premium in relation to its book value, as indicated by its Price to Book ratio of 51.05 which exceeds the industry average by 6.45x.

• The stock's relatively high Price to Sales ratio of 29.23, surpassing the industry average by 2.44x, may indicate an aspect of overvaluation in terms of sales performance.

• The Return on Equity (ROE) of 23.01% is 20.05% above the industry average, highlighting efficient use of equity to generate profits.

• The Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $22.58 Billion is 5.55x above the industry average, highlighting stronger profitability and robust cash flow generation.

• The gross profit of $26.67 Billion is 6.67x above that of its industry, highlighting stronger profitability and higher earnings from its core operations.

• The company's revenue growth of 69.18% exceeds the industry average of 19.61%, indicating strong sales performance and market outperformance.

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.

In terms of the Debt-to-Equity ratio, NVIDIA stands in comparison with its top 4 peers, leading to the following comparisons:

• NVIDIA is in a relatively stronger financial position compared to its top 4 peers, as evidenced by its lower debt-to-equity ratio of 0.12.

• This implies that the company relies less on debt financing and has a more favorable balance between debt and equity.

Key Takeaways

The low P/E ratio suggests that NVIDIA may be undervalued compared to its peers in the Semiconductors & Semiconductor Equipment industry. However, the high P/B and P/S ratios indicate that the market values the company's assets and sales more highly. On the other hand, the high ROE, EBITDA, gross profit, and revenue growth suggest that NVIDIA is performing well financially and experiencing strong growth compared to its industry peers.

This article was generated by Benzinga's automated content engine and reviewed by an editor.