As an investor, predicting the market or stock prices is unrealistic and meaningless, but for such an interesting topic, it is still meaningful to do some basic data research. Ultimately, speculation cannot be used as a basis for investment and has no guiding significance for real-world decisions. This analysis explores the recent performance gap between NVIDIA ( $NVIDIA(NVDA)$ ) and Advanced Micro Devices ( $Advanced Micro Devices(AMD)$ ) as of October 2025, delving into financials, partnerships, competitive dynamics, and market sentiment to understand why NVIDIA's growth has trailed despite its AI dominance.
NVIDIA
AMD
Current Stock Prices and Recent Performance
As of October 22, 2025 (market open, Eastern Time), NVIDIA is trading at $182.05, down 0.32% today with a volume of about 9.7 million shares. AMD is at $241.42, up 3.58% with a volume of around 33.2 million shares. This confirms the trend you noted—AMD has surged ahead, with a year-to-date (YTD) gain of approximately 99.87%, significantly outpacing NVDA's 36% YTD rise. Over the past month, AMD has gained about 45%, while NVDA has only advanced 10-15%, highlighting the recent divergence.
Partnerships with OpenAI: A Shared but Differentiated Landscape
Both NVIDIA and AMD have secured significant partnerships with OpenAI, the developer behind ChatGPT, to supply AI accelerators for its massive compute needs. However:
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NVIDIA's Deal: Announced in September 2025, NVIDIA committed to deploying at least 10 gigawatts (GW) of AI data centres using its systems, potentially involving millions of GPUs. Recent reports detail a $350 billion arrangement, including $100 billion in initial funding from NVIDIA, which OpenAI uses to purchase NVIDIA chips. This reinforces NVIDIA's position as the "de facto standard" for AI training, leveraging its CUDA software ecosystem and high-performance Blackwell GPUs.
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AMD's Deal: Revealed on October 6, 2025, AMD agreed to a multi-year partnership for 6 GW of Instinct GPUs (starting with 1 GW in 2026 using MI450 series). Notably, OpenAI received warrants for up to 160 million AMD shares (potentially ~10% of the company), which NVIDIA CEO Jensen Huang called "surprising." This equity component is seen as a creative way for AMD to secure the deal, but it has raised questions about dilution.
While both deals underscore OpenAI's need for diversified suppliers amid soaring AI demand (also involving Broadcom), AMD's announcement has acted as a stronger near-term catalyst for its stock. Market reaction suggests investors view it as validation of AMD's catch-up in AI, boosting sentiment and driving outsized gains. NVIDIA's larger-scale partnership, however, may be partially "priced in" given its market dominance, leading to muted response.
Why NVIDIA's Growth Has Trailed AMD's: Deeper Insights
Beyond the higher trailing P/E ratios (actually, AMD's is higher at 143.70 vs. NVIDIA's 51.86, though forwards are similar at ~29) and China-related factors, several interconnected dynamics explain NVIDIA's relative underperformance in October 2025. These stem from market risks, competitive shifts, and sentiment fatigue, even as NVIDIA's fundamentals remain robust (e.g., TTM revenue of $165.22B vs. AMD's $29.6B). Here's a breakdown:
1. Geopolitical and China-Specific Headwinds
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U.S. export restrictions on advanced AI chips have decimated NVIDIA's presence in China, dropping its market share in AI accelerators from 95% to 0% as of October 2025. This represents a loss of billions in potential revenue from what was once a key growth market.
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Broader geopolitical tensions, including supply chain diversification mandates, are pressuring NVIDIA's valuation. Analysts predict this could intensify in 2026, eroding its competitive moat as countries and companies seek alternatives to U.S.-dominated tech.
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AMD, while also affected, has less exposure and is positioning itself as a "second-source" option with open-source ROCm software, appealing to regions wary of NVIDIA's proprietary CUDA.
2. Rising Competition and Customer In-Housing
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Major clients like Google, Amazon, and Microsoft are developing custom AI chips (e.g., Google's TPUs, Amazon's Trainium), reducing reliance on NVIDIA. This "in-housing" trend threatens NVIDIA's profit margins, as these hyperscalers represent ~40-50% of its data centre revenue.
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AMD benefits here: Its lower-cost Instinct series and full-stack solutions (e.g., MI355X, Versal AI) are gaining traction as viable alternatives. Recent analyst notes highlight AMD's potential to capture 20-30% of the AI chip market by 2028, up from <10% today.
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Intel's entry (e.g., Crescent Island GPU in 2026) adds pressure, though it's still lagging behind both.
3. Valuation Concerns and AI Hype Fatigue
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Despite strong growth (Q2 revenue up 56% YoY), a growing chorus of sceptics argues the AI boom is maturing, with potential overcapacity in data centres. NVIDIA's premium valuation (e.g., price/sales ~27x) makes it vulnerable to any slowdown signals.
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AMD trades at a higher trailing P/E but lower forward multiples (reflecting expected 40-50% EPS growth), appearing more "undervalued" for growth investors. Its smaller market cap ($392B vs. NVIDIA's $4.4T) allows for amplified percentage moves on positive news like the OpenAI deal.
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Broader market rotation: Funds are shifting from overbought tech giants to underperformers like financials, contributing to NVIDIA's lag.
4. Technical and Sentiment Factors
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NVIDIA has faced "mystery underperformance" with no clear catalyst, leading to bearish pressure and calls for it to drop further amid broader market volatility.
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On X, sentiment shows AMD "catching up" after lagging, with its OpenAI deal and software improvements (e.g., ROCm) cited as turning points. Posts note institutional buying into AMD to chase performance, while NVIDIA is seen as "priced for perfection."
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Analysts remain bullish on both: NVIDIA upgraded to Buy by HSBC with revenue upside potential; AMD's price target raised to $300 by BofA, emphasising AI momentum.
Updated Financial Comparison (TTM as of Latest Quarters)
My Insights
NVIDIA's lag isn't a sign of fundamental weakness—its revenue and margins remain elite, and it's still the AI leader with unbeatable ecosystem lock-in. However, the market is forward-looking: Risks like China bans, client defections to custom silicon, and potential AI capex slowdowns are weighing heavily on NVIDIA due to its lofty expectations. AMD, as the challenger, benefits from "underdog" momentum—its OpenAI deal, despite the equity giveaway, signals credibility and diversifies the AI supply chain, attracting investors seeking alternatives amid antitrust scrutiny on NVIDIA.
That said, this divergence may be temporary. If NVIDIA's upcoming earnings (November) show Blackwell ramps beating estimates or sovereign AI wins, it could reclaim leadership. Conversely, any AMD execution slips (e.g., software delays) could reverse the trend. Both are strong AI plays, but NVIDIA's trail reflects a market pricing in peak dominance, while AMD rides the wave of perceived catch-up potential. Investors should watch Q3 reports and geopolitical updates closely—diversification across both could mitigate risks in this volatile sector.
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