Nvidia (NVDA 1.55%) is the hands-down leader in artificial intelligence (AI) processors, but rival Advanced Micro Devices (AMD 3.46%) has struck some high-profile deals lately that have piqued investor interest.
With Nvidia predicting annual AI infrastructure spending of up to $4 trillion by 2030, investors may be wondering which company will grab the biggest piece of the pie over the coming years.
While AMD's shares have nearly doubled over the past 12 months, compared to Nvidia's 54% gains, there are a couple of reasons why Nvidia remains the better long-term AI stock.
Image source: Getty Images.
AMD is accelerating, but its shares are expensive
AMD just scored a major deal with Meta Platforms to supply up to 6 gigawatts of AI data center processing. It's a big win for AMD, not just because it's constantly playing second fiddle to Nvidia in data center deals, but also because the deal is worth more than $100 billion.
Meta has the potential to take up to a 10% stake in AMD through the deal, and investors viewed all the details as good news, pushing AMD stock up when the deal was announced.
AMD recently reported impressive 2025 results, with revenue rising 34% for the year to $34.6 billion and diluted earnings per share soaring $165% to $2.65 per share. Management said that the company is "entering 2026 with strong momentum across our business" and issued revenue guidance for the first quarter of $9.8 billion, a 32% increase, at the midpoint.
NASDAQ: AMD
Key Data Points
But despite the recent Meta deal and the company's strong 2025 results, there's one glaring issue with AMD stock right now: It's very expensive. AMD shares have a trailing price-to-earnings ratio (P/E) of 101. That's pricey by most comparisons, even in the high-flying tech sector, which has an average P/E ratio of 41.
Paying top dollar for a stock comes with some inherent risks, including the investors' expectation for the company to continually put up very impressive financial results. Any slowdown in sales or earnings, or even a failure to meet analysts' consensus estimates in a given quarter, could prompt investors to head for the exits.
Nvidia is growing, too, and its shares are actually a good deal
While AMD's recent growth is good, Nvidia's is even more impressive. The company recently reported its fourth-quarter and fiscal 2026 results (ended Jan. 25), with total sales rising 65% to nearly $216 billion and adjusted earnings rising 60% to $4.77 per share.The company's bread and butter is its data center sales, and those surged 75% higher in Q4 to $62.3 billion.
Nvidia founder and CEO Jensen Huang said in prepared remarks that the adoption of AI agents is "skyrocketing" and that "our customers are racing to invest in AI compute." The demand spurred Nvidia's management to issue guidance for a 77% increase in sales in the first quarter to $78 billion.
NASDAQ: NVDA
Key Data Points
While rival AMD has made some important deals lately, Nvidia is still by far the leader in data center processors, with 86% market share in AI data center revenue compared to just 7% for AMD. Research from Morningstar shows that many tech companies are also locked into Nvidia's processors because they use Nvidia's CUDA software to run their data centers. That's an advantage that could keep tech customers tied to Nvidia's ecosystem for years, according to the research firm.
Finally, investors can buy Nvidia's stock for less. Nvidia's stock has a P/E ratio of 53 right now, which is slightly more than the broader tech sector's but far less than AMD's. Combine that with Nvidia's graphics processing unit (GPU) market share lead and the company's impressive financial results, and Nvidia is the clear AI stock winner over AMD.
