AI Sent AMD Soaring — But This Stock May Be the Better Value Play

AMD (AMD) has been one of the top-performing stocks in the S&P 500 ($SPX). Shares have surged more than 150% this year, driven by robust financial results. Notably, strong artificial intelligence (AI)-led demand for the company's CPUs and GPUs — supported by a broad customer base and sustained AI infrastructure investments — has been a key catalyst behind the rally.

While AMD stock has gained significantly in value, its growth story is far from over. As AI development shifts from training large language models (LLMs) to inference and next-generation agentic AI applications, demand for high-performance computing is expected to remain strong. That trend should benefit not only AMD's Instinct GPUs but also its EPYC server processors, positioning the company to capture growth across multiple segments of the AI infrastructure market.

However, although AMD is still a solid long-term AI investment, Nvidia (NVDA) offers a more compelling valuation relative to its growth prospects. That makes NVDA stock an attractive alternative for investors seeking a better value play.

Solid Growth, Low Valuation Make Nvidia Stock a Buy

Despite concerns over margin pressure and increasing competition from custom AI chips, Nvidia continues to strengthen its leadership in the AI infrastructure space. It is delivering exceptional revenue growth, expanding into new opportunities, and trading at a valuation that remains attractive relative to its long-term earnings potential and peers.

The AI investment boom is still in its early stages. Hyperscalers, AI model developers, cloud providers, and governments are all increasing spending on AI infrastructure, and Nvidia remains the biggest beneficiary. Its leadership in GPUs, networking hardware, and AI software has helped it capture the largest share of this rapidly growing market.

Nvidia's latest results highlight that strength. The company generated $81.6 billion in revenue, up 85% year-over-year (YOY), with $13.5 billion in sequential revenue growth. That is more than the total quarterly sales of many major competitors.

Data Center revenue hit $75.2 billion, increasing 92% YOY and 21% sequentially, driven largely by strong adoption of the company's Blackwell architecture. Within the segment, computing revenue reached $60 billion and networking revenue climbed to $15 billion, recording significant YOY growth.

Nvidia is also building a meaningful CPU business. Demand for its high-performance CPUs is expected to grow alongside GPUs. Management estimates the CPU market is worth about $200 billion and expects its CPU products to generate around $20 billion in revenue this year.

By offering integrated platforms that combine GPUs, networking, software, CPUs, and complete system architecture, Nvidia is expanding its addressable market while strengthening its competitive position.

Nvidia's product roadmap also supports continued expansion. Management believes products based on its Blackwell and Rubin architectures could generate $1 trillion in cumulative revenue between 2025 and 2027.

Despite this exceptional growth outlook, the valuation remains relatively low. NVDA stock trades at 23.2 times forward earnings, while analysts expect its earnings to grow 92% in fiscal 2027 and another 35% in fiscal 2028. By comparison, AMD stock trades at 84.1 times forward earnings, making Nvidia a compelling value play.

The Bottom Line

AMD has delivered exceptional returns as AI-driven demand for its CPUs and GPUs continues to accelerate, and the company remains well-positioned to benefit from the next phase of AI infrastructure spending. But Nvidia continues to deliver industry-leading growth with expanding market opportunities across GPUs, CPUs, networking, and AI software — all while trading at a considerably lower forward earnings multiple relative to its earnings growth outlook.

Although both companies are likely to remain key beneficiaries of the AI investment cycle, Nvidia's combination of strong earnings, a solid product roadmap, and more attractive valuation makes NVDA stock a compelling value play for long-term investors.