The AI revolution is stirring excitement across the board, particularly among companies actively involved in creating the massive infrastructure required to run the game-changing technology.
Nvidia (NASDAQ:NVDA) is the center of gravity of this rapidly expanding universe. The chip giant recently thrilled investors with yet another quarter of incredible growth, along with highly ambitious guidance for the rest of the year.
Against Nvidia’s burning light, Advanced Micro Devices (NASDAQ:AMD) seems a bit dim by comparison, according to Value Edge, a 5-star investor ranked in the top 4% of TipRanks’ stock experts.
The rabid demand for AI hardware should leave plenty of room for competitors in the supply-constrained industry, writes Value Edge. And yet, the investor adds “AMD is being entirely left behind by its closest competitor, Nvidia.” The reason is pretty straightforward: “Nvidia simply provides better products.”
According to the investor, this lack of symmetry in performance can be attributed to a different approach to chip design, CPU architecture, and software implementation.
To begin with, the various parts of NVDA’s chips are all part of the same unit, whereas AMD’s is more segmented. While this makes the AMD chips more cost-efficient, NVDA’s approach allows for entire data centers to function as one AI factory. NVDA’s approach is also more energy efficient, which is becoming an increasingly important factor for customers.
The big difference maker, Value Edge adds, is the software. “Nvidia runs away from the pack when it comes to the utilization of the hardware,” writes the investor, as NVDA’s offering “allows developers to more effectively utilize the hardware.”
All in all, Value Edge urges investors to stay put. “I expect AMD to underperform semis in the near future which are already priced quite rich. For that reason, I rate AMD a Hold at current levels as I do not see a lot of opportunity in a company trading at 10x sales while showing no revenue growth for a year and a half,” the investor summed up. (To watch Value Edge’s track record, click here)
In contrast, AMD’s role in future AI growth has garnered attention from Wall Street analysts, who are bullish on the company’s prospects. With 30 Buy recommendations and 6 Holds, AMD boasts a Strong Buy consensus rating. Its 12-month average price target of $192.88 represents ~16% upside from current levels. (See AMD stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
