Advanced Micro Devices (AMD -2.03%) and Qualcomm Inc. (QCOM -0.29%) are racing to power the next generation of artificial intelligence. Which of these chip giants offers the best combination of growth and value for your portfolio?
AMD & QCOM: Performance Comparison
Key Financial Metrics
Advanced Micro Devices focuses on high-performance computing for data centers and personal computers. Qualcomm leads the world in wireless connectivity and mobile processors. While they operate in different primary markets, both companies are now competing for a share of the expanding AI infrastructure and edge computing sectors, making them frequent choices for investors.
The case for Advanced Micro Devices
Advanced Micro Devices designs processors and graphics technologies for the data center, gaming, and personal computer markets. In its latest annual report, filed for the fiscal year ended December 2025, the company highlighted a strategic partnership with OpenAI. It also maintains a key supply agreement for semi-custom products with Sony Group Corp. (SONY +0.71%) and Microsoft Corp. (MSFT +2.38%), though such customer concentration adds risk.
In FY 2025, revenue reached about $34.6 billion, representing a growth rate of roughly 34% compared to the previous year. This substantial increase was accompanied by net income of approximately $4.3 billion, yielding a net margin of around 12.5%. This profitability is a significant improvement from the prior fiscal year, when the net margin was roughly 6.4%.
As of its December 2025 balance sheet, the debt-to-equity ratio, which measures total debt against shareholder equity, was approximately 0.1x. Its current ratio, measuring the ability to pay short-term debts with short-term assets, was roughly 2.9x. Free cash flow was close to $6.7 billion, though stock-based compensation represented roughly 21.2% of operating cash flow, which inflates reported cash generation since this non-cash expense is added back.
The case for Qualcomm
Qualcomm develops wireless technologies and mobile processors, identifying Apple Inc. (AAPL -1.11%), Samsung, and Xiaomi Corp. as significant customers in its latest annual report. It is expanding through a partnership with Amazon.com Inc. (AMZN +3.29%) to provide custom chips for data centers. These efforts are part of a broader strategy to diversify into the automotive and Industrial Internet of Things sectors.
In FY 2025, revenue reached approximately $44.3 billion, an increase of close to 14% over the previous year. The company reported a net income of roughly $5.5 billion, resulting in a net margin of about 12.5%. This profitability is lower than the 26% net margin seen in fiscal 2024 as the company competes among semiconductor stocks for market share.
As of its September 2025 balance sheet, Qualcomm reported a debt-to-equity ratio of roughly 0.8x, meaning total debt is about 80% of shareholder equity. The current ratio, which measures the ability to cover upcoming financial obligations, was approximately 2.8x. Free cash flow for the fiscal year was nearly $12.8 billion, providing ample capital for research and development.
Risk profile comparison
Advanced Micro Devices faces intense competition from established rivals such as Nvidia Corp. (NVDA -0.52%) and Intel Corp. (INTC -2.22%). The company is also vulnerable to internal chip-design initiatives from its own customers who may choose to build custom silicon. Supply chain dependency on a limited number of third-party foundries like GlobalFoundries Inc.(GFS -2.27%) also creates a potential bottleneck if manufacturing capacity becomes constrained.
Qualcomm deals with high revenue concentration in the handset market, making it sensitive to shifts in consumer demand for premium smartphones. It faces a specific threat from Apple, which is working to develop its own internal modem products to replace third-party chips. Geopolitical tensions and export restrictions have already impacted sales, while its fabless production model leaves it exposed to supply chain disruptions at outside foundries.
Valuation comparison
Qualcomm is cheaper as its Forward P/E, using future earnings estimates, and P/S ratio, using sales over the past twelve months, are lower than those of its peers.
| Metric | Advanced Micro Devices | QUALCOMM |
|---|---|---|
| Forward P/E | 84.5x | 17.5x |
| P/S ratio | 25.5x | 4.2x |
Valuation metrics include those sourced from Financial Modeling Prep (FMP) and may differ from those of other data providers.
Which stock would I buy in 2026?
Qualcomm's mobile phone business has been hammered this year, as weak Chinese demand and a scarcity of memory due to AI have caused handset-derived sales to fall below prior year levels. Yet the AI boom has an upside for Qualcomm.
At the company's June 2026 investor day, Qualcomm raised its non-handset revenue target to more than $40 billion by 2029, nearly double the prior target of $22 billion. Qualcomm is said to be partnering with OpenAI to create smartphone processors with advanced AI capabilities. Analysts see this partnership as a positive for Qualcomm since it would enable advanced agentic AI on smartphone platforms. It would also diminish the business risk of Apple developing its own chips and dropping Qualcomm as a supplier.
AMD, meanwhile, is riding the wave of a late 2025 deal to supply OpenAI with its own chips, potentially worth billions of dollars. Management believes the shift from large language models and generative AI to agentic AI and robotic AI will create even more demand for AMD's style of chips.
The company now expects demand for AI-related chips to rise more than 30% annually, up sharply from an estimate executives had provided at the start of 2026. On top of the AI strength, the business has notched impressive wins in healthcare and financial services in recent months.
All of that has analysts expecting AMD to ring up sales of $49.6 billion, a jump of more than 40% year over year, with net income of $8.7 billion.
Qualcomm is in value stock territory, especially for a tech stock, but the risks to its core handset market and the speculativeness of it being a supplier for a yet-to-be-developed ChatGPT smartphone make red-hot AMD the better buy, even with its high multiples.
