NVDA -1.29% AMD -2.28% Explore stocks on Coinbase Trading disclosure Trading disclosure The above button links to Coinbase. Yahoo Finance is not a broker-dealer or investment adviser and does not offer securities or cryptocurrencies for sale or facilitate trading. Coinbase pays us for certain activity generated through this link. Prices displayed are informational.
Nvidia (NASDAQ: NVDA) and Advanced Micro Devices (NASDAQ: AMD) are similar companies. While AMD's consumer business is larger and it has a wider product lineup, these two compete head-to-head in arguably the most important technological battle in the world: GPUs for artificial intelligence computing. While Nvidia stormed out to an early lead at the start of the AI boom in 2023, AMD has clawed its way back and is offering viable products that could serve as an alternative to Nvidia's product lineup.
If you ask the market, AMD is clearly winning the battle and stealing market share, which is why its stock has nearly tripled in 2026, compared with Nvidia's 23% gain. But this mismatch in stock performance has caused the two stocks' valuations to uncouple.
Missed AI's "Act 1"? Act 2 Could Be 14x Bigger. Most investors think they missed the AI boat because they didn't buy Nvidia in 2005. But according to our analysts, we're only at the end of "Act 1"—the R&D phase. "Act 2" is the global rollout. Continue »
This could be a huge warning flag for one (or both) of the stocks, and investors must understand what's going on and take proper action.
Over the past few years, Nvidia and AMD's valuations have been fairly in line with each other, outside of the last six months.
Since the end of spring, AMD's stock has been on an absolute tear, reaching heights never seen before. It now has a market cap of about $1 trillion, but does it actually deserve it? The question of what a fair price is for AMD's stock is tricky. AMD is doing its best since the AI boom kicked off in 2023.
AMD Revenue (Quarterly YoY Growth) data by YCharts
Its profit margins are at recent highs, and its growth rate is reaching new levels. That has caused the market to reprice AMD's stock, as it deserved, but the level it has reached seems a bit extreme. Although AMD is doing the best it's ever done, it's still nowhere near where Nvidia is now. And that's the major problem with AMD's stock.
During Nvidia's last quarter, it grew revenue at a 106% pace and reached a projected margin of 62%. That makes it a far stronger company than AMD, and from that information alone, there's no reason to bet on AMD over Nvidia.
Next year, AMD is expected to close the gap, but not by a huge margin. The average Wall Street analyst expects Nvidia revenue to grow at a 68% pace to $692 billion next year. AMD's revenue growth is expected to be about 75%, reaching $89 billion. So, AMD is expected to overtake Nvidia's growth rate, but with the two only a few percentage points apart, that's really not much of a separation.
As a result, AMD and Nvidia will likely be on par in terms of business performance next year.
If two stocks are comparable in business performance and operate in the same industry, I'd argue they should be priced the same. However, that's not the case. Investors must decide whether to stick with AMD's stock and potentially realize gains or switch to Nvidia's stock, which is undervalued. If next year's earnings projections are used, Nvidia's stock looks like a bargain deal, while AMD's looks expensive.
Even if AMD's 2027 earnings projections are used, it's still more expensive than Nvidia's stock is right now. That means there are about two years' worth of growth priced into the stock, but none is priced in for Nvidia. That makes Nvidia the far safer bet here, and if you have AMD shares, I think the smart move is to take the phenomenal gains the market has given you and swap them for Nvidia before it can continue its incredible rise.
Before you buy stock in Advanced Micro Devices, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Advanced Micro Devices wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $379,123!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,408,822!*
Now, it's worth noting Stock Advisor's total average return is 950% — a market-crushing outperformance compared to 215% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
*Stock Advisor returns as of October 12, 2026.
Keithen Drury has positions in Nvidia. The Motley Fool has positions in and recommends Advanced Micro Devices and Nvidia. The Motley Fool has a disclosure policy.
Nvidia and AMD Reached a Historic Valuation Split. 1 Stock Is Far Safer. was originally published by The Motley Fool
