Battle of the Super AI Chips: Time to Buy Nvidia or AMD's Stock?
The impeccable rally in Nvidia NVDA and AMD’s AMD stock has started to wear thin over the last few weeks but of course, corrections can be healthy.
To that point, investors may once again be pondering if it’s time to buy the dip in these chip leaders as semiconductor development for artificial intelligence remains in high demand.
Super AI Chip Competition
Luring the buy-the-dip scenario is that on Monday Nvidia announced a new processer design along with a family of chips called Blackwell which it says will now be the most powerful artificial intelligence transistors on the market.
Meanwhile, AMD has largely entered the conversation of new accelerators and processors for AI with its MI300 series chips. AMD’s MI300X chips helped the company take market share by battling Nvidia’s popular H100 series chips which have been used to train large language models (LLMs) like OpenAI’s chat GPT.
However, it's noteworthy that Nvidia has upped the ante as its most recent H200 and GH200 “super chip” was an upgrade to its AI computing platform and already the market leader before its newly announced Blackwell series.
Market Value
For now, Nvidia and AMD are considered the leaders in the semiconductor development for AI chips followed by Intel INTC with the market thought to be worth upwards of $60 billion. More intriguing, the AI chip market has a CAGR (Compound Annual Growth Rate) that is projected at 30% or higher in the coming years.
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Recent Performances & 52 Week Range
At the moment Nvidia’s stock trades just under $900 and roughly 8% from its 52-week highs of $974 a share seen earlier in the month. Nvidia’s stock is more than 250% above its 52-week lows of $251.30 a share seen last March.
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AMD’s stock trades around $182 and has dipped 25% from its 52-week peak of $227.30 a share which it hit a few weeks ago as well. That said, AMD’s stock has soared 125% above its lows of $81.02 a share witnessed last May.
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Year to date, Nvidia’s stock has soared +80% while AMD shares are still up +23% with both impressively topping the broader indexes and largely outperforming Intel’s -16%.
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Growth Comparisons
Glancing at the outlook for Nvidia, total sales are projected to soar 70% in its current fiscal 2025 to $103.49 billion compared to $60.92 billion in FY24. Even better, FY26 sales are expected to jump another 15%. On the bottom line, Nvidia’s annual earnings are forecasted to leap 81% in FY25 to $23.49 per share versus $12.96 a share in FY24. Fiscal 2025 EPS is projected to rise another 11% to $26.06 per share.
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Pivoting to AMD, its top line is expected to expand 11% in its current FY24 and climb another 22% in FY25 to $30.97 billion. Annual earnings are projected to climb 30% this year and soar another 46% in FY25 to $5.05 per share.
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Deciding Factor
There is no question that competition is great for the market as it relates to technological advancements. Still, Nvidia continues to have the edge in the development of semiconductors for artificial intelligence after further cementing its dominance with the Blackwell series and currently sports a Zacks Rank #1 (Strong Buy) while AMD lands a Zacks Rank #3 (Hold).
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