Is AMD or Nvidia the better buy?
A lot is still up in the air with the future of AI, so it’s impossible to know whether AMD or Nvidia is likely to benefit more from the market. Both companies are likely to snap up market share as the industry expands, making an investment in either company an attractive move.
However, looking at these companies’ businesses in their entirety, AMD is the better buy. Different areas of its business are more diverse than Nvidia’s, making it the more reliable investment. For instance, when it comes to consumer chip offerings, AMD is excelling at GPUs and central processing units, while Nvidia is almost all-in on GPUs. Even AMD’s game console business is more varied, partnering with Sony, Microsoft, and Valve. Meanwhile, Nvidia’s main source of console gaming revenue is from Nintendo’s Switch console.
Furthermore, AMD is in better financial standing based on its price-to-free cash flow ratio (P/CF) of 80, compared with Nvidia’s 190. Both figures are higher than what is considered a bargain. However, AMD’s lower P/CF suggests it is in better standing and a better buy right now…