Nvidia vs. AMD: Analysing Investment Potential in the Semiconductor and AI Landscape

Nvidia and Advanced Micro Devices (AMD) are pivotal players in the semiconductor industry, which is at the heart of the AI revolution. Both companies have established themselves as leaders in high-performance, AI-capable processors. While Nvidia has long been the dominant force, AMD is making strides to expand its market presence.

With earnings reports on the horizon, it’s an opportune moment to analyse the growth trajectories and competitive positions of these two companies to determine which stock might present a better investment opportunity.

 

Nvidia: The Industry Heavyweight

Nvidia stands as a titan in the semiconductor sector, boasting a staggering $3.37 trillion market cap, second only to Apple on Wall Street. Its remarkable growth—450% share price appreciation over the past three years—has been fuelled by the AI boom and its dominant presence in the AI chip market, where it commands over 80% share.

The company’s GPUs, initially designed for gaming, have proven indispensable in high-performance computing, data centres, and generative AI applications. Nvidia's data centre segment now accounts for the bulk of its revenue. The demand for its latest Blackwell series accelerators and existing Hopper chips underscores the company’s leading-edge technology.

Looking ahead to its fiscal Q4 2025 results, Nvidia is projected to achieve approximately $38 billion in revenue and $0.85 in EPS, marking an 8.4% increase in revenue and a 5% rise in EPS from the previous quarter. Analysts are overwhelmingly optimistic, with 36 of 39 rating Nvidia as a "Buy," giving the stock a consensus price target of $176.86—representing a 28% upside from its current price of $137.71.

 

AMD: The Challenger Making Waves

AMD, while not yet rivaling Nvidia’s dominance, is a respected force in the semiconductor industry. Over the past year, the company has intensified efforts to erode Nvidia’s market share with its innovative chipsets, particularly in PC processors and AI-capable accelerators.

AMD recently unveiled a suite of new Ryzen processors, tailored for next-generation AI applications in both consumer and commercial markets. Additionally, AMD’s partnership with Dell will integrate its Ryzen AI PRO processors into Dell’s commercial PCs, a significant milestone in its AI ambitions. Backed by partnerships with major players like Microsoft, Meta, and Oracle, AMD is positioning itself as a formidable competitor in the AI chip space.

The company’s financial performance has shown sequential growth, with Q3 2024 revenues reaching $6.82 billion—a year-over-year increase of 18%. For Q4 2024, Wall Street anticipates $7.53 billion in revenue and an EPS of $1.09, reflecting a 10% sequential revenue increase and an 18% rise in EPS.

However, AMD’s stock price has faced headwinds, declining 23% over the past year. Despite this, analysts remain moderately optimistic, with a consensus "Moderate Buy" rating. The stock’s current price of $121.46 is projected to rise to an average target of $172.24, offering a potential 42% upside.c

 

Conclusion: Nvidia vs. AMD – Which Is the Better Buy?

Both Nvidia and AMD are attractive investments in the booming semiconductor and AI sectors, but the choice depends on the investor’s priorities:

• For Stability and Proven Leadership: Nvidia’s dominant position, impressive market share, and robust revenue growth make it a strong candidate for long-term stability and consistent returns. Its significant presence in AI-driven markets underscores its position as a safer, albeit pricier, investment.

• For Growth Potential and Value: AMD offers a more affordable entry point with greater upside potential, given its aggressive push into AI and partnerships with tech giants. However, its smaller market share and recent stock decline indicate higher risk, requiring confidence in its growth trajectory.

Verdict: Nvidia’s established dominance and market performance make it a safer choice for risk-averse investors, while AMD presents a compelling high-reward opportunity for those willing to tolerate volatility. Given Nvidia’s consistent leadership and financial strength, it edges out AMD as the better buy right now.

 

(Source: TipRanks.com, ChatGPT)