Nvidia beats AMD on upside as valuation gap widens

The Motley Fool's comparison comes after a year in which AMD's stock outperformed Nvidia's, rising about 200% compared with Nvidia's 30% rise. That run-up has pushed AMD's forward price-to-earnings ratio above Nvidia's, making valuation the central issue in choosing between the two.

AMD's business is more diversified than Nvidia's and less concentrated in data center revenue, which the analysis says is hurting its overall results. Even AMD's data center division, which grew 107% year over year to $6.7 billion in the second quarter, lagged Nvidia's data center growth of 117% to $89 billion, despite AMD being a much smaller company. The analysis also notes that AMD's positive catalysts, including the OpenAI computing agreement and powering Meta's Meta Muse, are already reflected in its stock price.

Nvidia's position is supported by its industry-standard products, major agreements with AI hyperscalers, and management's estimate of 70% revenue growth in 2027. The Vera Rubin architecture, with its 10 times less token cost per inference versus Blackwell, may further dampen the thesis that AMD will take market share as AI workloads shift toward inference.