Why AMD Doesn’t Need To Beat Nvidia To Win

This article was written and reviewed by Doug Nathman and his team at Trefis. For questions, email help@trefis.com.

AMD (NASDAQ:AMD) shares have more than doubled this year and increased over fourfold in the last year. The reason is straightforward: the AI expansion is monumental – and which enterprise, big or small, or which government, affluent or struggling, wouldn’t seek a stake in it?

AMD doesn’t have to outperform Nvidia to succeed. It merely needs to serve as a reliable second supplier in such a vast market. The downside risk is offset by its continuous share gains against Intel (INTC) in the server segment, while the potential upside is tied to direct participation in the AI accelerator surge. Two engines, one stock.

The downside: with a price-to-earnings ratio of nearly 120x last year’s profits and over 20x sales, much of the optimistic narrative is already reflected in the stock price. The key question remains whether ongoing evidence will continue to materialize.

Below is how we articulate the thesis – along with the primary risk that we are monitoring most closely.