Nova (NVMI) AI Stock Analysis

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Nova

(NASDAQ:NVMI)

Rating:83Outperform

Price Target:

$315.00

▲(23.84% Upside)

Nova's overall stock score is driven by its strong financial performance and positive earnings call sentiment, highlighting robust growth and strategic market positioning. Technical analysis and valuation present moderate concerns, with a relatively high P/E ratio and neutral technical indicators. The absence of corporate events does not impact the score.

Positive Factors

Customer Wins

A win was noted at a leading memory customer for an HBM application, indicating strong customer engagement.

Record Performance

Nova reported record results, including record Foundry/Logic, Chemical Metrology, and Service sales.

Negative Factors

China Revenue Outlook

China revenue will be flat to down in the second half of the year.

Earnings Expectations

Somewhat lower earnings are expected in the June quarter on flattish sales.

Nova (NVMI) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$7.98B

Dividend YieldN/A

Average Volume (3M)260.57K

Price to Earnings (P/E)34.8

Beta (1Y)1.89

Revenue Growth43.69%

EPS Growth51.22%

CountryUS

Employees1,177

SectorTechnology

Sector Strength89

IndustrySemiconductors

Share Statistics

EPS (TTM)2.20

Shares Outstanding29,451,391

10 Day Avg. Volume243,045

30 Day Avg. Volume260,574

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)N/A

P/FCF RatioN/A

Enterprise Value/Market Cap1.06

Enterprise Value/Revenue11.39

Enterprise Value/Gross Profit19.88

Enterprise Value/Ebitda36.61

Forecast

1Y Price Target

$300.00

Price Target Upside17.94% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering7

Nova Business Overview & Revenue Model

Company DescriptionNova (NVMI) is a leading provider of advanced materials and photonics solutions primarily for the semiconductor industry. The company specializes in developing and manufacturing innovative metrology and inspection systems that are essential for the production of semiconductor devices. Nova operates in various sectors, including wafer fabrication, manufacturing equipment, and materials analysis, serving a global customer base that includes major semiconductor manufacturers.

How the Company Makes MoneyNova generates revenue primarily through the sale of its metrology and inspection equipment, which are critical for ensuring the quality and precision of semiconductor manufacturing processes. The company also earns income from providing software solutions and services that enhance the performance and efficiency of its equipment. Key revenue streams include direct sales to semiconductor manufacturers, ongoing maintenance and support contracts, and software licenses. Additionally, Nova benefits from strategic partnerships with leading technology firms and research institutions, which enhance its product offerings and market reach, ultimately contributing to its earnings.

Nova Earnings Call Summary

Earnings Call Date:Aug 07, 2025

(Q2-2025)

% Change Since: -1.30%|

Next Earnings Date:Oct 30, 2025

Earnings Call Sentiment Positive

The earnings call reflects a predominantly positive outlook with record-breaking revenue and profitability, significant growth in service and chemical metrology segments, and effective strategic positioning in the market. Despite the increase in operating expenses and tariff impacts, the positive aspects significantly outweigh the challenges.

Q2-2025 Updates

Positive Updates

Record Revenue and Profitability

Nova delivered another record quarter with revenue at the top end of guidance, marking a 3% sequential and 40% year-over-year growth. Profitability also exceeded guidance.

Strong Revenue Growth in First Half of 2025

Revenue in the first half of 2025 grew 45% compared to the same period last year, driven by logic capacity build-out and increased metrology intensity in DRAM and advanced packaging.

Service Business Performance

The service business acted as a growth driver with 10 consecutive quarters of revenue increase, achieving a 7% sequential and 31% year-over-year growth.

High Gross Margins Achieved

Blended gross margins were 58% on a GAAP basis and 60% on a non-GAAP basis, attributed to a favorable product mix.

Strategic Positioning and Market Share

Nova is well-positioned in the memory market, particularly in DRAM and high-bandwidth memory, with significant market share expansion in chemical metrology.

Negative Updates

Increase in Operating Expenses

Operating expenses increased to $61.6 million on a GAAP basis and $56.9 million on a non-GAAP basis, reflecting a rise in costs.

Tariffs Impacting Gross Margins

Newly implemented tariffs initially expected to reduce gross margins by 30 to 50 basis points are now estimated to impact by 20 basis points.

Company Guidance

In the call, Nova Limited provided guidance for the third quarter of 2025, indicating an expected revenue range of $215 million to $227 million. The company anticipates GAAP earnings per diluted share to be between $1.77 and $1.97, while non-GAAP earnings are projected to range from $2.02 to $2.22 per diluted share. The midpoint of these estimates suggests anticipated gross margins of approximately 57% on a GAAP basis and 59% on a non-GAAP basis. Operating expenses are expected to increase to around $63 million on a GAAP basis and $57.5 million on a non-GAAP basis. The effective tax rate for the quarter is projected to be approximately 16%. Additionally, Nova mentioned that the impact of newly implemented tariffs on gross margins is now estimated to be closer to 20 basis points, a more favorable outcome than initially anticipated.

Nova Financial Statement Overview

Summary

Nova demonstrates strong financial performance with impressive revenue growth, high profitability, and robust cash flow management. The company maintains a solid balance sheet with low debt and high shareholder equity, underscoring its financial stability and resilience in the competitive semiconductor industry.

Income Statement

Very Positive

Nova has demonstrated impressive revenue growth, with a 29.8% increase from 2023 to 2024. The gross profit margin of 57.6% and net profit margin of 27.3% reflect strong profitability. Consistent EBIT and EBITDA margins of 27.9% and 34.7% respectively indicate operational efficiency. These metrics highlight Nova's robust growth and profitability in the highly competitive semiconductor industry.

Balance Sheet

Very Positive

The company maintains a solid balance sheet with a debt-to-equity ratio of 0.25, showcasing a conservative approach to leveraging. A return on equity of 19.8% indicates effective use of equity capital to generate profits. The equity ratio of 66.7% suggests substantial financial stability. Overall, Nova's balance sheet reflects strong financial health with low debt and high shareholder equity.

Cash Flow

Very Positive

Nova's free cash flow grew by 105.1% in 2024, evidencing strong cash generation capabilities. The operating cash flow to net income ratio of 1.28 demonstrates effective cash conversion from earnings. Furthermore, the free cash flow to net income ratio of 1.19 indicates robust free cash flow relative to profits, which supports reinvestment and shareholder returns. These metrics show Nova's strong cash flow management.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	743.95M	672.40M	517.92M	570.73M	416.11M	269.40M
Gross Profit	426.13M	387.09M	293.18M	322.40M	237.36M	152.92M
EBITDA	231.46M	235.28M	172.41M	164.59M	121.32M	63.95M
Net Income	211.72M	183.76M	136.31M	140.21M	93.10M	47.91M
Balance Sheet
Total Assets	1.46B	1.39B	1.13B	984.11M	805.15M	655.79M
Cash, Cash Equivalents and Short-Term Investments	541.85M	586.57M	443.68M	373.50M	410.16M	423.87M
Total Debt	235.73M	236.10M	244.14M	246.06M	220.94M	214.42M
Total Liabilities	481.66M	462.63M	383.06M	397.14M	331.40M	284.25M
Stockholders Equity	982.12M	927.79M	750.75M	586.96M	473.75M	371.54M
Cash Flow
Free Cash Flow	220.13M	218.05M	106.34M	98.22M	127.45M	53.81M
Operating Cash Flow	243.40M	235.27M	123.53M	119.54M	132.26M	60.25M
Investing Cash Flow	-153.51M	-136.40M	-125.33M	-100.26M	-238.50M	-42.46M
Financing Cash Flow	-68.35M	-48.35M	10.00K	-29.81M	11.00K	181.41M

Nova Technical Analysis

Technical Analysis Sentiment

Neutral

Last Price254.36

Price Trends

50DMA

260.80

Negative

100DMA

225.82

Positive

200DMA

220.13

Positive

Market Momentum

MACD

0.89

Positive

RSI

42.23

Neutral

STOCH

57.11

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For NVMI, the sentiment is Neutral. The current price of 254.36 is below the 20-day moving average (MA) of 267.91, below the 50-day MA of 260.80, and above the 200-day MA of 220.13, indicating a neutral trend. The MACD of 0.89 indicates Positive momentum. The RSI at 42.23 is Neutral, neither overbought nor oversold. The STOCH value of 57.11 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for NVMI.

Nova Risk Analysis

Nova disclosed 51 risk factors in its most recent earnings report. Nova reported the most risks in the "Finance & Corporate" category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Nova Peers Comparison

Overall Rating

UnderperformOutperform

Sector (61)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
NVMI	83 Outperform	$7.98B	34.76	24.23%	―	43.69%	51.22%
AMKR	77 Outperform	$6.06B	20.01	7.37%	3.08%	-1.20%	-19.46%
ONTO	77 Outperform	$5.39B	26.47	10.53%	―	15.51%	20.31%
OLED	74 Outperform	$6.82B	28.02	15.07%	1.20%	6.23%	10.12%
CAMT	73 Outperform	$3.97B	32.14	24.28%	1.58%	27.88%	37.85%
Sector *	61 Neutral	$36.30B	7.30	-7.27%	1.97%	7.76%	-6.42%
ALGM	52 Neutral	$5.75B	―	-6.75%	―	-18.82%	-195.20%

* Technology Sector Average

Performance Comparison

NVMI

Nova

254.36

20.32

8.68%

AMKR

Amkor

23.76

-8.36

-26.03%

CAMT

Camtek

83.94

-14.51

-14.74%

ONTO

Onto Innovation

106.95

-107.02

-50.02%

OLED

Universal Display

141.47

-47.74

-25.23%

ALGM

Allegro MicroSystems

30.70

5.30

20.87%

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Aug 11, 2025