AMD vs. Nvidia Stock: One Metric Tells Me Which Is Clearly the Better Buy | The Motley Fool

AMD (AMD +2.36%) and Nvidia (NVDA 0.69%) are two stocks that are often compared. It makes sense, as these two are the top dogs in the graphics processing unit (GPU) space. GPUs have been the primary computing chip utilized for artificial intelligence (AI) training and computing up to this point, and they’ll likely maintain a dominant hold on this industry because of their ability to handle a variety of workloads and data sets.

Nvidia has been the biggest winner and has become the world’s largest company by market cap. However, over the past year, AMD has been the better investment. Its stock has risen over 350%, while Nvidia’s is up nearly 60%. Nvidia investors are happy with a strong return like that, but they’d be lying if they told you they weren’t a little jealous of AMD’s return.

Nobody can go back in time and reverse their investment decision; all that remains is to look at which is the better investment going forward. I believe there’s a clear metric that informs me which is the better buy, and it’s not even close.

AMD’s rise hasn’t been backed by similar business gains

When comparing stocks, I look at two key factors: growth and valuation. I want to ensure that a highly valued company has the growth to back it up. On the flip side, if I can find a stock that doesn’t have a premium valuation, yet is rapidly growing, then it’s a sign that the stock could be worth buying.

Today’s Change

(2.36%) $12.02

Current Price

$522.15

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