AMD vs. NVDA: Which Artificial Intelligence (AI) Semiconductor Stock Dominates the Next Phase of CPUs, GPUs, and Robotics?

Nvidia (NASDAQ: NVDA) and Advanced Micro Devices (NASDAQ: AMD) both are winning in this artificial intelligence (AI) revolution. These companies each make the graphics processing units (GPUs) needed to power the most crucial of AI tasks, such as the training of models. And this has translated into spectacular earnings growth and stock performance.

For example, in the latest quarter, Nvidia and AMD reported revenue gains of 85% and 38%, respectively. And their stock prices have each climbed more than 300% over the past three years.

So far, Nvidia has held the role of leader in this AI revolution. But now, as we move into the next stages, not only involving GPUs, but also central processing units (CPUs), and the era of robotics, will this continue? Which AI semiconductor stock will dominate in this next phase -- Nvidia or AMD? Let's find out.

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Nvidia's first-to-market advantage

First, let's consider the path of both companies so far. Nvidia entered the GPU for data center market first. The company, an expert in GPUs for gaming, recognized the AI opportunity early on and decided to tailor its powerful chips specifically for this area. As a result, Nvidia had the opportunity to build its reputation and remain quite a distance ahead of others that would later enter the market.

AMD, along with Intel, has been a leader in CPUs -- these are the main processors that power computers. The company also saw the potential of GPUs for AI, so progressively built strengths there -- but AMD hasn't surpassed Nvidia. Since Nvidia has put a focus on innovation, updating its GPUs on an annual basis, it's been very difficult for any other AI chip designer to catch up. That's why it's very likely that Nvidia will continue to dominate in the GPU market.

Now, let's consider the CPU. Previously, this chip hasn't played a major role in the AI story, but things are rapidly changing. Now, we're heading into the era of agentic AI. This refers to the software that actually considers problems and takes steps -- even many steps -- to address them. And the CPU is the key tool that powers this process.

AMD: a leader in CPUs

As mentioned, AMD has been a leader in the CPU market, so we might imagine that the company will hold onto that leadership in CPUs for AI. But it's very possible that Nvidia will dominate here too. The GPU giant, foreseeing this role of the CPU at this stage of the AI story, has developed its first stand-alone CPU for data centers -- and at the same time, it's created a superchip for personal computers, including a GPU and CPU. These innovations are set to launch in the second half of this year -- and Nvidia recently said that, as this unfolds, it's well positioned to lead in the CPU market.

It's important to note that, particularly in the PC market, Nvidia may have difficulty surpassing AMD, which has longtime strengths and dominance here. That said, Nvidia's CPUs may more easily dominate in the AI market as the company already has solid market share in this area.

Growth in robotics

Now, what about robotics? This is the field that could drive future chapters of AI growth, with Nvidia chief Jensen Huang saying humanoid robots may represent a $40 trillion opportunity. AMD offers the chips and systems that fuel robotics -- for example, its adaptive system-on-a-chip solutions are used to power surgical robots, and the company's Kria robotics starter kit may be used for a variety of industrial and robotic applications. Clearly, AMD is on track to succeed in this high-potential market.

Still, Nvidia remains in the lead with its full-stack approach to robotics, offering a broad portfolio of tools that help in the training, the powering, and the actual use of robots. Last year, as Nvidia launched its Jetson Thor robotics computer, it said that more than 2 million developers use the company's robotics stack.

Now, let's get back to our question: Which company -- Nvidia or AMD -- will dominate in the next phase of GPU, CPU, and robotics growth? Though AMD may hold onto leadership in the CPU market, particularly in the area of PCs, I would expect Nvidia, thanks to the strengths it's built out over time, to continue to lead in the GPU market -- and take the No. 1 spot in robotics too.

Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Intel, and Nvidia. The Motley Fool has a disclosure policy.