AMD vs. Nvidia. 1 Metric Proves Which Is the Best Stock.
AMD and Nvidia are two major competitors in the AI computing realm.
The ongoing debate over whether AMD or Nvidia is the better GPU stock has shifted towards AMD in recent times. While AMD's stock has risen about 150% this year, outpacing Nvidia's 16% return, the real question is which will perform better in the future. Recent data points to Nvidia as the stronger performer. AMD's data center revenue grew 107% year over year to $6.7 billion in Q2, indicating a positive trend.
However, AMD's overall revenue growth is slower compared to data center products, with a 50% overall revenue growth rate to $11.5 billion. In contrast, Nvidia's data center business grew 117% to $89 billion in its latest quarter, reflecting its larger size and faster growth. Nvidia's revenue grew at a 106% pace to $96.2 billion, positioning it as the stronger company overall.
The market's preference for Nvidia's hardware also supports this stance. While both companies are projecting a long-term AI build-out through 2030, Nvidia's superior position in data centers and higher earnings projections suggest it will thrive as a company. Valuing the companies based on next year's earnings projections shows Nvidia trading at 13 times earnings, while AMD trades at 33.5 times earnings.
This premium would require AMD's stock to stay flat until then, while Nvidia's stock would need to more than double to reach fair value. Therefore, Nvidia emerges as the stronger buy in this comparison.
Written by urgent.news from Motley Fool's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
