Nvidia (NVDA) was the big winner in the AI space during 2024 as it solidified its lead in GPUs, which led to a 185% stock rally. Meanwhile, Advanced Micro Devices (AMD) lagged behind with a more limited AI presence that caused its stock to drop 11%. However, looking ahead to 2025, Nvidia is expected to see a moderate slowdown in growth, which could allow AMD to gain more ground over the next couple of years. While I’m bullish on both companies for the long term, I believe AMD is better positioned for a bigger upside in 2025.
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In this article, I’ll dive deeper into why I think the performance gap between Nvidia and AMD could look very different in 2025 compared to the past year.
The Case for NVIDIA in 2025
Although I believe in the idea that “the trees cannot climb to the skies forever,” I still think it’s unlikely that Nvidia will experience a major decline in 2025. So, for now, I wouldn’t suggest that bulls take their finger off the “buy” button just yet.
First off, Nvidia’s guidance suggests that growth should remain strong for a while. Analysts expect Nvidia to grow its bottom line (earnings) by around 50% year-over-year and its top line (revenue) by 51% for the current fiscal year, which ends in January 2026. Keep in mind that these projections come after a truly massive 2025 Fiscal Year, where EPS is expected to soar by 128%, and revenues are set to jump by 113%.
Looking ahead to 2026, we’ll see a bit of a slowdown. Analysts expect Nvidia’s EPS to grow by 26%, with revenues up by 21%. That said, these projections have already been revised upward by about 18% in the past few months as analysts have adjusted their forecasts to reflect Nvidia’s ongoing success. A big part of this optimism comes from the continued progress in Nvidia’s profitability, especially with the upcoming launch of its next-generation Blackwell technology.
Nvidia’s Valuation Overview
One of the main reasons I’m bullish on Nvidia is the safety we’ve historically seen in investing in the company based on its solid fundamentals and projected earnings. There have been times when Nvidia might have seemed expensive based on trailing 12-month earnings, but I’ve often found reassurance in the fact that the stock remained relatively cheap when looking at forward two-year guidance. This is largely due to the predictable demand for its products, which has kept its valuation multiples in the mid-20s.
While some bears argue that most of Nvidia’s growth expectations are already priced into the stock, I believe there’s still significant potential. In particular, I expect strong demand for Blackwell from hyperscalers and large-cap tech companies to continue beyond Fiscal 2026. Based on earnings projections for Fiscal 2027 (which corresponds to 2026), Nvidia’s forward P/E multiple would be around 26.7x. That’s much more reasonable compared to its current five-year average P/E of 63.6x.
It’s worth mentioning, though, that Sequoia Capital, a well-known venture capital firm, has projected that AI hardware spending will stabilize in 2025 and beyond. If that happens, it could justify applying a more cautious P/E multiple—possibly below 20x. Even so, considering Nvidia’s competitive advantages and market leadership, I don’t think this means the stock is trading at overly stretched or irrational multiples that would rule out a buying opportunity right now.
Is NVDA A Buy, According to Wall Street Analysts?
At TipRanks, the consensus on Nvidia is overwhelmingly positive. Out of 40 analysts, 37 recommend buying the stock, while the other three are on the fence. The average price target for Nvidia is $177.03, which, based on its current price, suggests an upside of about 18.5%.
The Case for AMD In 2025
I’m currently bullish on AMD and think 2025 could be a big year for the company’s shares. After a rough 2024, when AMD’s stock got sidelined, it’s looking for redemption. Even though its stock has been down in recent quarters, AMD’s fundamentals are actually improving. Take its most recent quarter (Q3) as an example—revenues hit a record $6.82 billion, up 17.5% year-over-year, and gross margins set a new high at 53.56%. Operating income also saw a nice bump, reaching $724 million for Q3 after being negative for four straight quarters between the second half of 2022 and the first half of 2023.
So, what does this mean for 2025? Based on estimates, AMD is expected to end 2024 with EPS and revenue growth of 25.4% and 13.4%, respectively—much more modest growth compared to Nvidia. However, for 2025, AMD’s projections show EPS growing by 53.2% and revenues by 26.8%. Even more interesting, AMD is projected to grow by 38% in EPS and 23.2% in revenue in 2026, which are higher growth rates than Nvidia’s projections for the same period.
Why is this important? Well, AMD is likely becoming better positioned in the AI space. The company has a strong, growing AI server CPU business that’s less concentrated than Nvidia’s and an AI server GPU segment with the potential to challenge Nvidia’s 90% market share. Specifically, AMD’s upcoming MI350 series is expected to ramp up in 2025, which should provide stiff competition to Nvidia’s Blackwell.
AMD’s Valuation Multiples Overview
Another reason I’m optimistic about AMD in 2025 is that it’s in a great position for investors to take advantage of a fairly priced stock based on its future growth potential.
AMD has had strong growth in the last couple of quarters, hitting record numbers in both revenue growth and margins. Yet, I feel like the company’s fundamentals are somewhat overlooked. Looking ahead to 2026, with projections showing EPS growth of 25.4% in 2024, 53.2% in 2025, and another 38% in 2026, AMD would trade at a P/E ratio of just 18.4x, adjusted for growth. That’s much more reasonable than Nvidia’s valuation.
Given this, I think AMD presents an attractive investment opportunity at more de-risked multiples. We could see more investors start to favor AMD, viewing it as a strong contender for the “AI darling” of 2025.
Is AMD A Buy, According to Wall Street Analysts?
Similar to Nvidia, analysts are quite bullish on AMD as well. Out of 32 analysts, 24 have a Buy recommendation, while eight are neutral, giving the stock a Strong Buy rating. The upside potential looks even more promising than NVDA’s, with an average price target of $184.37, which suggests a 42.3% upside from its current price.
Conclusion
For this year, I don’t expect AMD to grow its top and bottom lines at the same pace as Nvidia. However, given that 2025 performance will likely reflect projections for 2026 and beyond, the trend seems to be that Nvidia will gradually lose some of its massive market share to AMD.
As a result, while I see both stocks as a Buy, AMD might be more appealing right now. It’s less risky in terms of valuation adjusted for growth, though it’s uncertain whether the market will reward AI and data center players that come in second place. Still, if I had to pick the better stock for 2025, I’d go with AMD this time.
