I Missed the AMD Pump... Is Nvidia Stock Next?

Ladies and gentlemen, AMD just showed off their earnings and they blew away expectations. As an Nvidia shareholder myself, with over 50% of my portfolio betting on Jensen Wong, it makes me curious if maybe I should be diversifying my portfolio and betting more on Lisa Sue with AMD in this video. That's exactly what we're going to discuss. Now, it's important to note that Nvidia is up roughly 4% today after AMD's earnings because it was great for the entire semiconductor industry. We are only up roughly 16% over the last month. Nothing to complain about, but nothing even remotely as exciting as AMD is up 87% in the last month. AMD shareholders have a very, very big reason to be excited. They absolutely killed it and Lisa Sue is performing. The main thing that's bringing up earnings right now is Lisa Sue's excitement about guidance. In November, we outlined the server CPU market growing at approximately 18% annually over the next 3 to 5 years. Based on the demand signal that we're seeing today and the structural increase in CPU compute requirements driven by Agentic artificial intelligence, we now expect the server CPU TAM to grow at greater than 35% annually, reaching over $120 billion by 2030. This is exactly why ARM, Intel, and AMD ended up running after Lisa Seuss said this comment. However, Nvidia is only just starting to sell rack scale CPU servers. Hopefully, you know, fingers crossed they do well here, but the market really hasn't seen whether or not these products are actually going to sell. So, the market is kind of being hesitant in waiting a couple quarters to see if the Vera CPUs can start to take market share. But jumping into the actual comparison, the number one thing that I constantly hear about buying AMD over Nvidia is that you don't have to pay for the most expensive company in the world. You're talking about buying a roughly $700 billion business versus purchasing a $5 trillion business, which is a massive difference. It's also important to note whenever looking at things like total revenue, because whenever we're comparing apples to apples on total revenue, for example, of course Nvidia is going to be larger. They are a much bigger company. So, I'm not giving any points to Nvidia just for having a larger business. However, whenever we look at the growth rates, this is where I'm starting to count the points because although Nvidia is so much bigger, they've also been consistently growing much faster than Nvidia even in the most recent quarter in Q1, which is what AMD just ended up showing off. And Nvidia is technically not their Q1. It actually should be over here. And what we're actually expected to see is even faster growth. 78.8% next quarter is what Wall Street's currently expecting. But even without that and as an advantage to AMD for all the slides that we're going to look after, AMD is still the much faster growing business. But going on to gross margin, which essentially shows off which company has more pricing power and which one's getting more profitable based on what they're selling and Nvidia has a much much higher gross profit margin at nearly 75% when AMD is sitting at between the 50 to 55% range. But if we continue on here, going past operating expenses and taxes, the end level of their profit, we're also seeing Nvidia on a percentage basis being extremely way higher than AMD, which is only bringing in roughly 13% versus Nvidia's between 55 to 63%. This gives Nvidia a massive advantage because every quarter that you're clocking in 55 60% net income margins, you have all that additional income to then put back into the business to then reacelerate your growth, be able to buy up things like memory supply or photonic supply and be able to outmatch that pricing that potentially other competitors might have like AMD for example. It also gives them flexibility to give back to shareholders if for example they don't continuously see the AI market continuing. If that ends up happening, they could give back via dividends, buybacks, or potentially paying down debts. But let's talk about why they have a higher margin, or at least some aspects of it. Stock-based compensation as a percentage of revenue goes to show how much outside of just cashbased compensation is actually diluting the company to bring on highquality talent. And AMD is spending much more as a percentage of overall revenue versus Nvidia that has to pay less. And that still ends up showing up in research and development because Nvidia has currently the best products and most customers are coming to them. You're seeing that in the growth rate and the margins that people are willing to pay. They are still spending much less in terms of research and development which also allows them to get even better margins on the bottom line. And this looks to be showing up in every metric, mind you, all the way down to free cash flow margin, where we can see that Nvidia's free cash flow margin as of last quarter was 51%. Just a little bit more than double what AMD's was, which is showing off how much cash that they're actually generating. And then this metric was also quite shocking to me. Nvidia versus AMD on return on invested capital or ROIC where Nvidia is showing up anywhere between 45 to 55% ranges as of the last 2 years where AMD is somewhere between 1 to 2%. So whenever we combine these metrics of both growth and profitability this comes up in different ways. One of them is a rule of 40. A rule of 40 is taking that growth rate that you see on total revenue growth but also potentially on adjusted EVIDA margins where you can see AMD has a 64% rule of 40. The rule of 40 is saying if you can get to 40% that's a really quality business. AMD has been holding up 60% and definitely not a bad feat at all. I absolutely love this from AMD and I want to continue to highlight that I do like AMD's business and if I didn't have a share in Nvidia, I would definitely be buying into AMD. However, whenever I compare it to Nvidia, their rule of 40 is nearly 140%. Nvidia has one of the highest rule of 40s in the entire stock market across software, hardware, or any of the other tech names and yet they're the largest company in the world. But this brings us to valuation cuz you could pay a lot for growth and a lot for high margins and potentially the company shouldn't be worth as much. But whenever we look at a price to earnings ratio saying how much investors are willing to pay for the company's earnings that they just put up, what we end up seeing is that AMD is way higher. We're looking at a difference of almost 140 times versus 40 times on their multiple. And mind you, this is a massive advantage to AMD because they just showed off earnings. And Nvidia is about to show off earnings. Meaning that if the stock doesn't move and they end up increasing in overall net income, this will bring down their PE ratio. And then looking at the forward basis for these companies, meaning the next 12 months of earnings on their PE ratio, we end up seeing AMD greatly decrease because they are expected to grow a ton, but still at a roughly 50 times where Nvidia also fell a lot from 40 times down to 23 times, making it much cheaper on a forward basis as well. Free cash flow is no different. we end up seeing almost 78 times on a free cash flow basis for AMD and then a 50 times on Nvidia. Meaning this is a much cheaper business whenever you look at free cash flow, earnings per share and forward earnings per share. Then we have the PEG ratio which is Peter Lynch's favorite metric that combines both price to earnings and the growth rate of these companies. So you end up looking at these companies over a potential three or 5year base. AMD is not expensive here at a one times PEG ratio. This is why I want to continue to harp on the fact that I still absolutely like this valuation. I think that AMD is worth it here at $400 plus dollars a share. But Nvidia, whenever I look at this company at 6 times, it's a screaming valuation right now compared to their growth. And I absolutely love the deal that the market is still giving me. This is why Wall Street is putting a $274 price target on Nvidia or a 3738% upside over the next year while AMD's is roughly at the price that they're at today. Only about a 2% upside from where Wall Street is expecting. And yes, these are the analyst forecasts for after earnings. But overall, both companies are going to do well as long as AI infrastructure continues to build out. We can see this in the big tech capital expenditure spend now passing almost $150 billion. a quarter as of Q1 of 2026. This means more GPU sales, more CPU sales, more LAN power shell, more networking, and all of these things that go across AMD and Nvidia. They're doing this because revenue backlog had just passed over $2 trillion. Well, for both a mix of revenue backlog and RPO in general. And you're seeing this also in the growth of the big cloud names like Microsoft Azure, Google Cloud Platform, and Amazon Web Services. If this growth keeps up or even accelerates, both AMD and Nvidia are going to do well. But this is why I continue to be a large investor in Nvidia because I'm just not really seeing a reason to sell it off to buy another name because the market has already taken advantage of it being underpriced over the last month to 3 months. But ladies and gentlemen, let me know what you guys think. If you guys continue to bet on AMD or if you're potentially looking to shift into more of an Nvidia style portfolio or if you're buying the semis at all, let me know in the comments down below. But until next time, guys.