Nvidia vs. AMD: Who’s Leading the AI Stock Surge?
Many tech companies are embracing artificial intelligence, but semiconductors like Nvidia (NASDAQ: NVDA) and Advanced Micro Devices (NASDAQ: AMD) are taking center stage. As AI infrastructure spending rises, which of these companies stands out as the better investment? Let’s explore.
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Nvidia’s Dominance in AI Semiconductors
For anyone interested in AI stocks, Nvidia is hard to ignore. The company leads the AI semiconductor market, with estimated market share between 70% and 95% in AI data centers.
Such dominance creates a formidable barrier for competitors. Nvidia maintains a significant edge in AI hardware and consistently introduces sought-after innovations, like the new H200 chip. This has driven Nvidia’s share price up by 379% over the past three years.
Financially, Nvidia is thriving. In its second quarter, which ended July 28, revenue soared 122% compared to a year earlier, reaching $30 billion. Non-GAAP earnings per share climbed 152% to $0.68.
While Nvidia’s rapid gains may slow, there’s still potential for growth. According to Goldman Sachs, AI data center spending is expected to hit $1 trillion in the coming years. As investments in AI infrastructure continue, Nvidia’s leadership in processors positions it well for future benefits.
AMD’s Promising Prospects
AMD is another key player in the AI sector, competing closely with Nvidia. During its third quarter, which concluded on September 28, AMD reported $6.8 billion in revenue, an 18% increase from the previous year. Diluted GAAP earnings per share hit $0.47, marking a 161% rise year-over-year.
A significant driver of AMD’s growth is its data center business. This segment, which includes AI processor sales, saw revenue skyrocket 122% to $3.5 billion in the third quarter. Like Nvidia, AMD is reaping rewards from large investments in AI data centers.
During its earnings call, AMD’s management noted expanded use of its MI 300X processor by Microsoft and Meta. Microsoft utilizes this processor for “multiple co-pilot services powered by GPT-4 models,” as shared by AMD CEO Lisa Su.
Due to heightened demand for AI chips, AMD raised its revenue estimates for data center GPUs from $2 billion to $5 billion for the year.
Nvidia: The Stronger Long-Term Investment
While both Nvidia and AMD capitalize on AI’s growth, Nvidia’s significant market share and revenue performance suggest it may be the stronger investment choice in the long run.
Moreover, Nvidia’s stock appears relatively more affordable. Its price-to-earnings ratio stands at 69, compared to AMD’s 130, indicating Nvidia shares might be a better value right now.
Although both companies will likely experience growth due to the AI boom, Nvidia is positioned as the leading AI chip company and a promising investment opportunity.
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Randi Zuckerberg, a former director of market development at Facebook and sister to Meta Platforms CEO Mark Zuckerberg, serves on The Motley Fool’s board of directors. Chris Neiger holds no positions in any mentioned stocks. The Motley Fool has stakes in and recommends Advanced Micro Devices, Goldman Sachs Group, Meta Platforms, Microsoft, and Nvidia. The Motley Fool also recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. For details, refer to The Motley Fool’s disclosure policy.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
