To The Moon

If you have to choose between AMD or NVIDIA, which one will you add at the current prices?

As of March 25, 2025, investors evaluating Advanced Micro Devices (AMD) and NVIDIA Corporation (NVDA) face a nuanced decision, as both companies are prominent players in the semiconductor industry with significant roles in artificial intelligence (AI) and graphics processing.

Current Stock Performance

On March 24, 2025, AMD’s stock closed at $113.85, marking a 7.0% increase from the previous day. Despite this uptick, AMD’s share price remains 39.2% below its 52-week high of $187.28, reached on July 10, 2024.

NVIDIA’s stock closed at $121.41 on the same day, reflecting a 3.2% increase. The company has experienced a 12.5% decline in its stock value since the beginning of the year, partly due to investor caution amid political and economic instability.

Valuation and Growth Prospects

AMD currently trades at a forward price-to-earnings (P/E) ratio of 25.6, while NVIDIA’s forward P/E ratio stands at 34.0. This suggests that AMD may be more attractively valued relative to its earnings growth prospects. Wall Street analysts project AMD’s earnings per share (EPS) to grow by 48.3% over the next 12 months, compared to a 41.3% growth forecast for NVIDIA.

Market Position and Challenges

NVIDIA maintains a dominant position in the AI chip market, holding approximately 90% market share in GPUs used for AI workloads. The company’s technological lead is bolstered by its comprehensive software ecosystem, notably the CUDA platform, which has become an industry standard.

AMD has made significant strides under CEO Lisa Su, notably surpassing Intel in the data center CPU market in 2024. However, AMD faces challenges in the AI sector, particularly in competing with NVIDIA’s entrenched position. The company has been working to improve its software offerings to better support AI applications, but it continues to trail NVIDIA in this area.

Analyst Perspectives

Goldman Sachs recently downgraded AMD from “Buy” to “Neutral,” citing a conservative outlook for PC and traditional server markets, as well as modest growth expectations for data center GPUs amid intense competition. The price target for AMD was reduced to $129. In contrast, Goldman maintains a “Buy” rating for NVIDIA, with a price target of $165, highlighting NVIDIA’s leadership in the AI industry.

Conclusion

Both AMD and NVIDIA are influential players in the semiconductor industry, each with unique strengths and challenges. Investors seeking a company with a dominant position in the AI market and a robust software ecosystem may find NVIDIA appealing, despite its higher valuation. Conversely, those looking for a company with a more attractive valuation and strong growth prospects in the CPU market might consider AMD. Ultimately, the choice between AMD and NVIDIA should align with individual investment strategies and risk tolerance.

Disclaimer: Please kindly do your own due diligence as this is a sharing article and in no means financial advise.

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