Nvidia or AMD: Which AI Stock is a Smarter Buy?

Published Date: 03/07/2024

Nvidia and AMD are two of the biggest players in the artificial intelligence (AI) chip market, but which one is the better investment?

The adoption of artificial intelligence (AI) technologies has skyrocketed since the start of last year, with the debut of OpenAI's ChatGPT toward the end of 2022 wowing the tech world and highlighting the vast potential of the emerging technology. As a result, numerous companies have focused their businesses on AI, hoping to win a slice of a pie that Grand View Research forecasts will be worth nearly $2 trillion annually by 2030.

Increased demand for AI services has also increased the need for high-end chips to power them -- chips like the graphics processing units (GPUs) that Nvidia (NASDAQ  NVDA) and Advanced Micro Devices (NASDAQ  AMD) develop. Nvidia's years of dominance in GPUs allowed it to snap up an estimated 90% market share in AI chips, leading to soaring earnings and stock growth.

Nvidia has become a Wall Street darling since the boom in AI kicked off -- its stock is up about 745% since the start of 2023. The company is the go-to chip supplier for AI developers worldwide. Soaring demand for Nvidia's GPUs has seen its quarterly revenue and operating income climb 93% and 149% during the past four reported quarters. Meanwhile, free cash flow (what's left of cash flow after capital investments) has soared 147%.

Advanced Micro Devices (AMD) has also jumped into the AI chip market, launching competing AI GPUs this year. However, its total revenue rose just 2% during the period due to steep sales declines in other areas of its business. That result compared to Nvidia's revenue growth of 262% in the same quarter didn't do much to attract investors. AMD stock is up by just 7% year to date, while Nvidia's has jumped 125%.

Both companies have positions in multiple markets, including cloud services, consumer products, and emerging markets like self-driving cars and virtual/augmented reality. However, Nvidia's lead in AI and its dominance in GPUs suggest that it is the better AI stock to buy in 2024.

 Advanced Micro Devices (AMD) is a leading semiconductor company that develops computer processors and related technologies. Nvidia (NASDAQ  NVDA) is a technology company that designs and manufactures graphics processing units (GPUs) and high-performance computing hardware.

  Information  The artificial intelligence (AI) market is expected to grow significantly in the coming years, with Grand View Research forecasting that it will be worth nearly $2 trillion annually by 2030. The demand for high-end chips to power AI services has increased, with Nvidia and AMD being two of the biggest players in the AI chip market.

FAQs:

Q: What is the projected value of the AI market by 2030?

A: According to Grand View Research, the AI market is expected to be worth nearly $2 trillion annually by 2030.

Q: Which company has the largest market share in AI chips?

A: Nvidia has an estimated 90% market share in AI chips.

Q: How much has Nvidia's stock grown since the start of 2023?

A: Nvidia's stock is up about 745% since the start of 2023.

Q: How much has AMD's stock grown year to date?

A: AMD stock is up by just 7% year to date.

Q: Which company is the better AI stock to buy in 2024?

A: Nvidia is the better AI stock to buy in 2024 due to its lead in AI and its dominance in GPUs.

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