XRP (XRP 0.38%), the third-most-valuable cryptocurrency in the world, has taken the sector by storm since Donald Trump won the U.S. presidential election. The price of XRP is up more than 530% since election night. Trump has embraced crypto, surrounding himself with several officials who support cryptocurrency. He has also promised a lighter regulatory touch and to make the U.S. "the crypto capital of the world."
XRP's market cap has gotten so large that it is now bigger than many large tech stocks that have been around for years and decades. Will XRP, the cryptocurrency created by Ripple, eventually surpass the large artificial intelligence player Advanced Micro Devices (AMD 2.27%)? Let's take a look.
Both have upside
As of Jan. 24, XRP's market cap was about $181 billion, while AMD's market cap was $199 billion. AMD designs different semiconductor products that make artificial intelligence (AI) possible, including central processing units (CPUs), graphics processing units (GPUs), and field-programmable gate arrays (FPGAs). Some of the largest technology companies in the world use AMD's products to power their products, whether it's gaming, their cloud business, or AI and machine learning models.
While most AI companies enjoyed a stellar year in 2024, AMD struggled, with its stock falling about 18%. One issue AMD has run into is AI chip leader Nvidia. As most investors know, Nvidia dominates the market. It has incredible market share and margins, and, therefore, incredible pricing power.
AMD Gross Profit Margin (Quarterly) data by YCharts.
AMD is in an interesting position, because many analysts have actually expressed concerns about the company's prospects and earnings trajectory this year. However, they still think the risk-reward setup is favorable, considering that AMD operates in a sector with a large and growing total addressable market. During the past three months, 32 analysts have issued research reports on the company, with 21 rating the stock a buy, 10 saying to hold, and one saying to sell. The average price target implies almost 40% upside from current levels.
Meanwhile, after years of underperforming, XRP has broken out. The cryptocurrency is still facing an appeal from the Securities and Exchange Commission (SEC) in an ongoing lawsuit regarding whether Ripple and its founders sold XRP as an unregistered security in 2013. Most observers suspect the appeal will not succeed and the lawsuit will eventually be put to bed once and for all. This would let XRP bypass a major regulatory headwind that has stymied the company since 2020, and potentially pave the way for a spot crypto exchange-traded fund (ETF).
XRP may also benefit as Ripple's stablecoin RLUSD picks up steam, because XRP tokens are needed for RLUSD transaction fees. Ripple is also being used by several financial institutions to conduct cross-border payments. XRP's network can process up to 1,500 transactions per second, which is a lot, but it also faces stiff competition from Solana.
Will the AI or crypto wave last longer?
Whether XRP eventually has a larger market cap than AMD will depend on how long the crypto rally lasts. During crypto rallies, XRP tends to outperform Bitcoin, which is considered a bellwether for the sector, but it also tends to underperform in crypto bear markets.
It's hard to see the crypto rally running out of steam in the near term, given Trump's pro-crypto stance, but the sector is incredibly volatile. If inflation turns out to be stickier than expected, that may slow some of the momentum. The AI wave may also continue, although AMD has not benefited nearly as much as peers and it outright struggled in 2024.
Ultimately, I suspect XRP will surpass AMD in market value if the crypto rally continues. AMD has work to do to prove to investors that it can truly take advantage of the large market opportunity it has.
