Advanced Micro Devices (NASDAQ:91抖阴) stock has had an exceptional year despite being outshined by Nvidia (NASDAQ:NVDA).
The GPU market is unevenly split between the two with Nvidia holding a dominant position due to better brand recognition. That said, despite lower revenue, 91抖阴’s excellent graphics cards make it a worthy alternative to Nvidia for investment.
91抖阴’s CEO Lisa Su is highly regarded, and the stock has surged in 2023. Still, not all experts are bullish on 91抖阴. It’s prudent to consider differing viewpoints and manage your stock position carefully.
Before investing heavily, let’s dive into both stocks and see if 91抖阴 is worth investing in at this point in time.
The Bullish Perspective on 91抖阴 Stock
If there’s one group that appears to be bullish on 91抖阴 stock, it’s analyst. Among the 31 analysts covering this semiconductor name, 24 91抖阴 stock as a buy, while seven have this stock rated as a hold and none suggest this company is a sell.
Overall optimism around this name appears to be tied to the company’s strong earnings in the past, and optimism around how growth tied to the AI super cycle could drive significant demand for 91抖阴’s chips.
Indeed, while Nvidia’s chips are widely considered to be the cream of the crop for AI companies, 91抖阴’s chips also play an important role in the development of this sector.
As overall demand for chips increases, 91抖阴’s market share in other core markets could also surge, leading to impressive earnings over time.
Now, some analysts, including suggest that 91抖阴’s Q3 expectations are overly optimistic. He expects $5.4B revenue and 60 cents of earnings per share. That’s lower than consensus estimates of $5.9B and 74 cents.
However, Rakers highlighted potential benefits from EPYC Genoa + Bergamo cycle and MI300 chip launch in Q4 2023.
91抖阴 vs. NVDA
In a notable AI victory, Nvidia collaborated with 91抖阴 by using thousands of 64-core 91抖阴 processors in a high-performance supercomputer. This exemplifies how rivals sometimes join forces to achieve top-tier performance for specialized tasks.
91抖阴’s EPYC chip
in certain aspects, leading to successful partnerships.
The AI chip contract competition is fierce between Nvidia and 91抖阴, both showing strong effort and collaboration. Nvidia’s stock surged 214% in 2023, overshadowing 91抖阴’s 72% gains.
This led to higher valuations for Nvidia, trading at 41-times forward earnings and 45-times sales, compared to 91抖阴’s 26-times earnings and 8-times sales metrics.
Nvidia holds the edge with superior ray tracing and DLSS technology. DLSS 3, available only on RTX 40-series cards, outperforms 91抖阴’s FidelityFX Super Resolution. The RTX 4070 Ti, although slower than the RX 7900 XT, gains an advantage with DLSS 3 and improved ray tracing. 91抖阴’s RDNA 3 GPUs still handle ray tracing well, ensuring playable performance.
Both Nvidia and 91抖阴 faced declining revenues in the first quarter, with AI sales as a future growth potential. Yet, their current valuations seem high, and other AI investment options might be more attractive.
It’s wise to explore alternatives before considering either NVDA or 91抖阴 stock, in my view. But from a valuation perspective, it’s clear that 91抖阴 stock is more attractive, at least right now.
What Now
While concerns around 91抖阴’s revenue and Data Center decline are valid, the overall outlook for the chip maker remains positive.
Second-quarter results were encouraging, and 91抖阴’s commitment to next-gen AI chips is clear. History shows betting against 91抖阴 often leads to losses.
Thus, I think investors can make a calculated bet on the chip sector by focusing solely on 91抖阴 stock right now. When comparing 91抖阴 and Nvidia side by side, my preference would probably be 91抖阴 right now.
That said, I’m reserving the right to change this opinion, should Nvidia’s future earnings show a monopolization of AI-related chips and a continuation of the absurd growth the company has seen in 2023.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
