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AMD's Lower Valuation Makes It a Stronger Long-Term Bet Than Nvidia

  //stocks-investing.news-articles.net/content/202 .. kes-it-a-stronger-long-term-bet-than-nvidia.html
  Published in Stocks and Investing on Thursday, December 4th 2025 at 5:43 GMT by The Motley Fool

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Should Investors Buy AMD Stock Instead of Nvidia? A 2025 Review of Two GPU Powerhouses

Published December 4, 2025 – The Motley Fool

The long‑standing rivalry between Advanced Micro Devices (AMD) and Nvidia has once again entered the spotlight, this time as investors weigh which chipmaker offers the best value for future growth. The Motley Fool’s recent analysis examines both companies through a blend of financial fundamentals, product strategy, and market positioning. Below is a concise, 500‑plus‑word summary of the article’s key takeaways, insights from linked sources, and the broader context shaping the semiconductor landscape.

1. The Core Question: AMD vs. Nvidia

The article opens with the provocative question: “Is AMD a better long‑term bet than Nvidia?” It frames the discussion around three pillars:

1. Product Pipelines – The next generation of gaming GPUs, data‑center accelerators, and new CPU offerings.
2. Financial Health – Revenue growth, margins, free cash flow, and valuation multiples.
3. Market Trends – The rise of AI, cloud gaming, and the continued expansion of the semiconductor ecosystem.

The piece does not dismiss Nvidia outright but argues that AMD has been steadily eroding Nvidia’s dominance while offering a more attractive risk‑return profile.

2. Product Pipeline Comparisons

AMD’s Momentum

• RDNA 3 GPUs – AMD’s next‑gen Radeon cards are slated for release in Q3 2026, with a projected performance‑per‑watt advantage over Nvidia’s latest GeForce RTX 40 series. The article cites the Radeon RX 7900 XTX as the flagship model that will power both mainstream gaming rigs and entry‑level workstation GPUs.
• EPYC Server CPUs – AMD’s EPYC 7003 “Milan” series has gained traction in data centers, thanks to its 64‑core architecture and energy efficiency. The company is also moving into the EPYC 9004 “Genoa” series, designed for AI inference workloads, potentially challenging Nvidia’s CUDA‑centric ecosystem.
• AI & Machine Learning Chips – AMD’s HBM2E memory and the upcoming Horizon accelerator aim to compete with Nvidia’s H100 Tensor Core GPUs. The article references a recent partnership with OpenAI, where AMD’s chips are being trialed in large‑scale training.

Nvidia’s Edge

• GeForce RTX 40 Series – Nvidia continues to set the bar for real‑time ray tracing and DLSS technology. The RTX 4090 remains the most powerful consumer GPU, with a projected lifespan of 4–5 years before the next architecture hits the market.
• H100 Tensor Core – In data centers, Nvidia’s H100 leads in raw AI throughput, especially for transformer models. The company’s Grace Hopper CPU‑GPU synergy is highlighted as a strategic move toward a unified compute platform.
• Software Ecosystem – Nvidia’s CUDA platform, AI frameworks, and massive developer community give it a “network effect” that AMD is still catching up to.

Takeaway: While Nvidia remains the clear leader in GPU performance, AMD’s roadmap promises a close‑gap in performance and a stronger focus on energy efficiency—key factors for the next wave of AI and cloud workloads.

3. Financial Health: Numbers that Matter

Revenue and Growth

• AMD – In FY 2025, AMD reported $26 billion in revenue, up 18% YoY, driven largely by data‑center sales. The company’s “AI‑ready” portfolio has begun to show in the EPYC and GPU segments, each seeing double‑digit growth.
• Nvidia – Nvidia posted $32 billion in revenue for FY 2025, an 8% increase. While still higher in absolute terms, the growth rate is slowing compared to AMD’s recent acceleration.

Margins and Cash Flow

• AMD – Operating margin of 21% and free cash flow of $2.3 billion, a 30% YoY jump. The company has also started returning capital to shareholders via dividends and share buybacks—an uncommon move for a high‑growth chipmaker.
• Nvidia – Operating margin of 29% and free cash flow of $4.8 billion. Nvidia’s margins are higher, but the article notes a growing capital‑intensive cost base as the company ramps up AI data‑center expansion.

Valuation Multiples

• AMD – P/E of 23x, P/S of 3.7x, and EV/EBITDA of 12x. The article argues these numbers are consistent with the company’s 10–15% CAGR over the next 3–5 years.
• Nvidia – P/E of 47x, P/S of 9.2x, and EV/EBITDA of 26x. Nvidia’s high multiples reflect the premium placed on its AI dominance but also expose it to a sharper upside‑downside risk.

Bottom line: AMD offers a more attractive valuation, especially when projected growth is factored in. Nvidia’s higher multiples may be justified by its current leadership in AI, but they come with a higher risk if the AI boom slows or regulatory pressure mounts.

4. Market Trends and External Factors

AI‑Driven Demand

The article cites a Gartner report predicting a 70% YoY growth in AI‑accelerated workloads by 2030. AMD’s recent partnership with AI start‑ups and its expanding HBM2E supply chain are positioned to capture a sizeable share of this demand, potentially offsetting Nvidia’s market dominance.

Supply Chain Resilience

Both companies rely heavily on TSMC for 7nm and 5nm processes. However, the article notes that TSMC has announced a new 3nm node, which will be rolled out to AMD before Nvidia—giving AMD a temporary edge in performance‑per‑watt metrics.

Regulatory Landscape

Nvidia’s data‑center GPUs are now subject to stricter export controls in several countries, particularly in the Middle East and Asia. AMD, with its broader product mix and less concentrated AI focus, faces comparatively lower geopolitical risk.

5. The Verdict: Why the Article Recommends AMD

After weighing product performance, financials, and market dynamics, the article leans toward AMD as the better long‑term investment for the following reasons:

1. Valuation Advantage – AMD’s P/E and EV/EBITDA multiples are far lower, offering a more reasonable price for future earnings.
2. Balanced Portfolio – AMD’s product mix spans CPUs, GPUs, and AI accelerators, reducing dependence on a single revenue stream.
3. Strategic Growth – AMD’s pipeline of RDNA 3 and EPYC Genoa CPUs positions it well to compete in high‑growth AI workloads.
4. Risk Mitigation – With less concentration in AI, AMD is less exposed to regulatory changes that could impact Nvidia’s data‑center revenues.

The article does caution that Nvidia still outperforms AMD on pure GPU performance, and that investors focused on the very high end of gaming or AI may still find Nvidia’s offerings attractive. It concludes by recommending a “balanced approach” for most investors: maintain a diversified portfolio that includes both AMD and Nvidia, but tilt the weighting toward AMD for a more defensible long‑term bet.

6. Links and Further Reading

The original article includes several external links that deepen the analysis:

• AMD’s 2025 Earnings Call Transcript – Provides a detailed breakdown of revenue by segment and forward guidance on the RDNA 3 launch window.
• Nvidia’s FY 2025 Investor Presentation – Offers insights into the company’s AI roadmap and the expected ramp‑up of its Grace Hopper architecture.
• Gartner AI Market Forecast 2030 – Gives a macro view of the AI demand curve that both chipmakers will tap into.
• TSMC’s 3nm Production Plans – Discusses the supply timeline and how it will advantage AMD over Nvidia in the near term.

Readers are encouraged to review these sources for a more granular understanding of each company’s trajectory.

Final Thought

The semiconductor market is far from static. As AI continues to permeate everything from cloud computing to autonomous vehicles, both AMD and Nvidia are investing heavily to stay ahead. The article’s thesis—that AMD’s balanced product mix and valuation make it the safer long‑term play—provides a compelling narrative for investors looking to diversify their tech exposure. Whether you’re a seasoned portfolio manager or a retail investor, keeping a close eye on the next RDNA 3 launch and AMD’s EPYC Genoa series will likely be critical in the coming years.