Nvidia vs. AMD: A Stock Market Showdown in AI Hardware

Nvidia dominates the AI hardware market, significantly outperforming AMD. With Nvidia's strong revenue growth and AMD's recent struggles, investors are weighing their options. Will AMD rebound, or should investors stick with Nvidia?

Date: 26-04-2025

AI Rating: 7

Market Performance Comparison
Nvidia and AMD are both leading players in AI computing hardware, but how they compare in terms of performance and potential is crucial for investors. Nvidia's position is notably stronger, with significant revenue contributions from its data center segment, contributing a staggering $115 billion to its total revenues. In contrast, AMD's revenue growth, while impressive at 94% year-over-year in its data center division, translates to only $12.6 billion, indicating a large gap between the two companies. Nvidia has experienced a nearly 400% increase in revenue since the beginning of 2023, while AMD's growth has remained in the single digits despite its gains in the AI market.

Revenue Growth and EPS Implications
The earnings per share (EPS) for AMD spiked due to a one-time event, making it less reliable for evaluating its stock. This points to potential volatility in AMD's earnings versus Nvidia, which shows consistent and robust performance. The analysis highlights that AMD struggles with revenue strength outside its growing data center segment which can further question its overall market competitiveness against Nvidia.

Valuation Metrics
Using forward P/E ratios, Nvidia is trading at 23 times earnings while AMD trades at 19 times forward earnings, suggesting that AMD is only marginally cheaper. This valuation may lead some investors to view Nvidia as the more favorable investment due to its stronger fundamentals and market presence in the ever-growing AI sector, one of the most lucrative markets in recent history.

Overall, while AMD shows some satisfying growth in its data center revenue, the stark contrast in scale and growth speed between Nvidia and AMD may sway investor sentiment towards Nvidia as the primary choice for exposure to AI computing means. Investors should assess the risk of investing in AMD against the proven growth trajectory of Nvidia as they consider positioning for the next quarter.

Stocks: NVDA AMD