One of the most captivating subplots in the world of tech investing is AMD versus Nvidia argument. At first glance, the comparison seems quite unfair, as Nvidia is a $4 trillion juggernaut, and AMD is a far smaller $260 billion market cap. Nevertheless, being bigger does not always mean better. AMD is gradually establishing its own unique position, and is no longer the “second-best option” only.
The latest Instinct chips from AMD are attracting the eyes of the leading AI players, which is not an easy achievement in a market where Nvidia is dominant. That said, while Nvidia is going to be the safe option for the next several years, AMD is becoming the stock that investors who are ahead of the growth curve would put money into.
Nvidia undoubtedly leads over the rest of the pack in profitability, control, and customer confidence, it’s the company that powers most of the AI data centers in the world. That is what makes many justify its valuation, even when it is at very high levels.
However, when we dig deeper, we find that AMD has something that Nvidia doesn’t have, which is a relatively cheaper price and the potential to astonish the market. Their MI350 chips have already found their way into seven out of the ten biggest AI companies, and with the MI400, the next one in line, they could even become more powerful.
In addition, the stock of AMD is still traded at a higher forward P/E multiple than that of Nvidia, which makes it “more expensive” relative to its profits. Therefore, it all comes down to personal preference and priority for investors.
Nvidia represents stability and superiority, whereas AMD proposes risk, volatility, and possibly higher upside if its AI strategy turns out to be successful. AMD has the potential to amaze you with the extraordinary profits if the company goes on breaking the dominance of Nvidia in the market. If you are the kind of investor who is not afraid of taking the risk then you might find that AMD is the real “deal” compared to Nvidia, not because it is undervalued today but because it has the potential to become as big as Nvidia in the future.
