AMD vs Nvidia stock – two semiconductor giants executing their business plans to be leaders at the bleeding edge of technology. These two microchip leaders are trading near all-time highs. Is AMD or NVDA a better buy?
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The AMD dynasty was founded in 1969 by Jerry Sanders and seven others from Fairchild Semiconductor – the same company that the founders of Intel left in 1968. Sanders would serve as CEO until 2002, overseeing AMD through its IPO in 1972 and three decades of Moore’s Law.
By the time Lisa Su took the reigns in 2014, AMD was quite a mess. In 2015, AMD had negative $412 million in their equity account, meaning they had more liabilities than assets on their balance sheet.
The balance sheet transformation that Su has led puts her in the conversation for the greatest non-founder CEO of all time. And if that’s not enough, the way AMD executes in both the GPU and CPU markets should seal the deal.
This rivalry truly runs deep when it comes to AMD vs Nvidia stock. Nvidia was founded in 1993 by Jensen Huang, a former AMD chip designer.
Huang confounded Nvidia and two others from Sun MicroSystems with the vision of personal computers becoming devices for games and multimedia.
In 1999, they invented the Graphics Processing Unit, or GPU, and had their IPO. Jensen Huang is still CEO today.
$NVDA stock has crushed the returns compared to the SP500, its peers, AND technology stocks. Semis are the future, and investors seem to be well aware of this report courtesy of StockRover, the best value research tool for retail investors.
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Modern Products: AMD vs Nvidia Stock
As the GPU inventor, Nvidia owns that market with about 80% market share. They have specific chips for each category they serve. For example, their GeForce products are for gaming, and the AGX products are for self-driving cars, medical devices, or robotics.
Nvidia believes and is proving itself to be correct that the GPU will be an essential element for AI (including self-driving vehicles), VR, and modern data centers.
Any of the exciting technological advances currently being invented. These markets should help Nvidia lock in many years of growth in the future.
AMD released new 7nm chips (the smaller the transistor, the more transistors can fit on a chip, furthering Moore’s law) in 2019; around the same time, Intel released their first 10nm microchips across their entire product line.
They have the Ryzen family of products in personal computing, Radeon GPUs for gaming, and EPYC for the data center. AMD has taken a little market share from Nvidia in the GPU market over the past year.
And they’re taking market share from Intel in computing and data centers. AMD is ON FIRE! Check out the fundamental and technical stats on $AMD below.
Financials: AMD vs NVDA Stock
AMD has been executing its business plan to near perfection. But we shouldn’t lose track of NVDA’s financials. Nvidia is a cash machine with one of the best balance sheets I have ever seen.
As of January 26th, they had $10.9b in cash and equivalents against $1.9b in current liabilities. NVDA generated $4.27b in free cash flow last year while spending $2.86b on research and development and $550 million in capital expenditures.
Year over year, however, last year saw a significant downturn in revenue and EPS, down 6.8% and 31.8%, respectively.
As mentioned above, AMD has massively improved its balance sheet over the past several years to have now a debt: equity ratio below 1 (0.93) as of March 28th.
In the last fiscal year, AMD grew revenue by 3.95% while EPS was down slightly. AMD generated $276 million in free cash flow last year while spending $1.5b on R&D and Capex of $217m.
AMD vs Nvidia comparison chart – AMD dividend-adjusted return vs NVDA. On the lower portion of the chart, we see Pice to Sales displayed. Report from stockrover
Quarterly Results
AMD announced strong first-quarter results on April 28th and sees continued growth this year despite the COVID-19 headwinds. Nvidia will announce its Q1 results on May 21st.
Another consideration for an investor looking at these two companies is that NVDA pays a small dividend ($.64/year is about a .22% yield). This reflects the strong free cash flow that NVDA generates and confidence in its ability to continue generating plenty of cash.
One of my favorite ways to compare two growth companies is to compare their PEG ratios, which divide a company’s PE by their growth rate.
A PEG below one would be considered a strong buy. AMD’s PEG is around 3.5, compared to NDVA’s 4.7, suggesting full pricing for each stock.
AMD’s growth has been exceptional. However, NVDA continues to get a premium because of its incredible balance sheet and long free cash flow generation history.
Which Is Better Nvidia or AMD Stock?
Which is better in the Nvidia or AMD debate? Nividia has owned AMD when it comes to the high-end GPU market. In other words, NVDA wins over more expensive graphic cards. NVDA is more efficient than AMD and has more bang for its buck regarding price versus what you get.
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Stock Charts In Focus
Looking at AMD vs Nvidia, you can’t deny the momentum of these stocks. AMD was the best-performing stock in the S&P 500 in 2018 and 2019.
They had reached an all-time high of $59.27 on February 19th, the same date as the all-time high for the S&P before the COVID-related selloff. After the selloff, AMD rallied to retest those highs, forming a cup.
It has since pulled back somewhat and is now forming a handle, a high-probability setup for a breakout. (Learn more about cup and handle patterns).
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Our favorite charting platform, Trendspider, provided the stock chart. *Open your favorite charting tool to view the current price of $AMD*
NVDA set its all-time high at the same time in February at $316.32 and is presently trading just below that level. It also looks poised for a breakout after several days of consolidating between $280 and $300.
Macro factors drive the market in many ways, but a strong earnings report on May 21st will likely push NVDA to new all-time highs. Check out the huge inverse head and shoulders on the $NVDA daily chart.
Consult your data before ever pulling the trigger on an investment or trade! This report is provided by Stock Rover.
Final Thoughts: AMD vs Nvidia Stock
The microchip space has traditionally been one of the most cyclical industry sectors in the market.
However, as the world has become increasingly dependent on digital data, chips have become almost a consumer staple.
AI, self-driving cars, online gaming, VR, and data centers are strong long-term secular trends that will provide the best semiconductor companies with a long runway for growth. Intel is the largest company in the space, but AMD and NVDA are taking market share from INTC.
In my opinion, both companies are buys on pullbacks. Regarding AMD vs. Nvidia, I favor AMD for their long-term growth prospects and the momentum they have behind them over the past couple of years. Should you buy AMD right now if you are hungry for more reading?
But NVDA should be a good long-term investment as well. As with anything, risk management is key, and staying up on fundamentals and the technicals will give you a healthy approach.
Let us know in the comments who you got in the semiconductor industry, and don’t forget to check out our stock training program to increase your knowledge of the charts!
