Understanding NVIDIA's Position In Semiconductors & Semiconductor Equipment Industry Compared To Competitors
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 | 46.69 | 38.56 | 24.78 | 29.14% | $38.75 | $41.85 | 62.49% |
| Broadcom Inc | 73.42 | 20.43 | 26.60 | 11.02% | $9.86 | $12.25 | 28.18% |
| Taiwan Semiconductor Manufacturing Co Ltd | 31.07 | 9.77 | 13.45 | 9.44% | $691.11 | $588.54 | 30.31% |
| Advanced Micro Devices Inc | 112.59 | 5.76 | 10.96 | 2.06% | $2.11 | $4.78 | 35.59% |
| Micron Technology Inc | 27.25 | 5.49 | 7.65 | 9.28% | $8.35 | $7.65 | 56.65% |
| Qualcomm Inc | 34.88 | 8.83 | 4.36 | -12.88% | $3.51 | $6.24 | 10.03% |
| Intel Corp | 602.67 | 1.62 | 2.98 | 3.98% | $7.85 | $5.22 | 2.78% |
| Texas Instruments Inc | 32.26 | 9.68 | 9.39 | 8.21% | $2.24 | $2.72 | 14.24% |
| Analog Devices Inc | 60.87 | 4.02 | 12.51 | 2.32% | $1.47 | $1.94 | 25.91% |
| ARM Holdings PLC | 143.01 | 15.98 | 26.95 | 3.3% | $0.22 | $1.11 | 34.48% |
| Marvell Technology Inc | 30.45 | 5.22 | 9.64 | 13.84% | $2.58 | $1.07 | 36.83% |
| NXP Semiconductors NV | 27.84 | 5.64 | 4.77 | 6.43% | $1.11 | $1.79 | -2.37% |
| Monolithic Power Systems Inc | 24.45 | 12.80 | 17.25 | 5.12% | $0.21 | $0.41 | 18.88% |
| ASE Technology Holding Co Ltd | 31.62 | 3.37 | 1.72 | 3.56% | $32.4 | $28.88 | 5.29% |
| First Solar Inc | 20.89 | 3.24 | 5.79 | 5.19% | $0.61 | $0.61 | 79.67% |
| Credo Technology Group Holding Ltd | 129.47 | 21.09 | 36.03 | 7.99% | $0.09 | $0.18 | 272.08% |
| STMicroelectronics NV | 45.03 | 1.30 | 2.06 | 1.33% | $0.31 | $1.06 | -1.97% |
| ON Semiconductor Corp | 75.45 | 2.80 | 3.72 | 3.22% | $0.44 | $0.59 | -11.98% |
| United Microelectronics Corp | 14.92 | 1.76 | 2.64 | 4.29% | $30.07 | $17.62 | -2.25% |
| Tower Semiconductor Ltd | 70.79 | 4.83 | 9.17 | 1.9% | $0.13 | $0.09 | 6.79% |
| Lattice Semiconductor Corp | 382.85 | 14.83 | 21.38 | 0.4% | $0.01 | $0.09 | 4.92% |
| Rambus Inc | 44.99 | 7.89 | 15.15 | 3.84% | $0.08 | $0.14 | 22.68% |
| Average | 96.04 | 7.92 | 11.63 | 4.47% | $37.85 | $32.52 | 31.75% |
By conducting an in-depth analysis of NVIDIA, we can identify the following trends:
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With a Price to Earnings ratio of 46.69, which is 0.49x less than the industry average, the stock shows potential for growth at a reasonable price, making it an interesting consideration for market participants.
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It could be trading at a premium in relation to its book value, as indicated by its Price to Book ratio of 38.56 which exceeds the industry average by 4.87x.
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The Price to Sales ratio of 24.78, which is 2.13x the industry average, suggests the stock could potentially be overvalued in relation to its sales performance compared to its peers.
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The Return on Equity (ROE) of 29.14% is 24.67% above the industry average, highlighting efficient use of equity to generate profits.
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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.
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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.
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The company’s revenue growth of 62.49% exceeds the industry average of 31.75%, 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 light of the Debt-to-Equity ratio, a comparison between NVIDIA and its top 4 peers reveals the following information:
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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.
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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.
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