If you’ve been following semiconductor stocks lately, you’ve probably noticed Advanced Micro Devices (NASDAQ:AMD) having an incredible 2025. The stock has jumped 93% year to date, easily beating its rival Nvidia (NASDAQ:NVDA), which is up 36%. For years, Nvidia has dominated both the AI chip market and investor returns. But AMD’s recent surge has investors asking: Could this finally be AMD’s time to outperform Nvidia for good?
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AMD vs. Nvidia: The underdog and the giant
Nvidia is massive, valued around US$4.5 trillion, with yearly revenue of US$165 billion. In contrast, AMD is much smaller, worth about US$378 billion, with revenue near US$29.6 billion. Surprisingly, that smaller size gives AMD a growth edge.
Here’s why: when a company is already huge, it’s hard to keep doubling. For Nvidia to double its market cap, it would need to add another US$4.5 trillion in value — nearly creating a second Nvidia. But for AMD, even capturing a small part of Nvidia’s AI chip business could mean massive percentage growth. For example, a US$25 billion boost in sales would raise AMD’s revenue by 84%, while it would lift Nvidia’s by only 25%.
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How AMD plans to close the gap
AMD is now focusing heavily on the AI chip market, aiming to take share from Nvidia’s near-monopoly. Its new MI450 AI accelerators, set to hit mass production in 2026, are a key part of that plan. The company also struck a major deal with OpenAI, which involves building six gigawatts of AI infrastructure — a strong signal of confidence from one of the biggest AI players.
Another big win is AMD’s partnership with Oracle, which plans to use 50,000 AMD GPUs starting in 2026. Together, these deals show growing demand for AMD’s chips.
Valuation check
However, AMD’s stock isn’t cheap. Its forward P/E ratio is 102, compared with Nvidia’s 41.7. Even with its growth story, AMD looks pricey. Nvidia’s PEG ratio of 0.8 suggests it may still offer better value, while AMD’s 1.5 implies it’s already fully valued after this year’s rally.
In short, AMD is closing the gap — but Nvidia’s lead is still tough to beat.
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