AMD vs. Nvidia. 1 Metric Proves Which Is the Best Stock.

The debate over whether Advanced Micro Devices (NASDAQ: AMD) or Nvidia (NASDAQ: NVDA) is the better GPU stock has raged on for ages. At the start of the artificial intelligence (AI) arms race in 2023, it was Nvidia all day. In 2026, that narrative shifted in AMD's favor as its stock has risen about 150%, well above Nvidia's comparatively tame 16% return.

But all of that is in the past; what matters more is what each one will do in the future. I think there's one metric that points to which stock will be the better performer, and it clearly favors Nvidia.

Image source: The Motley Fool.

Nvidia's revenue growth is superior to AMD's

In 2026, AMD has made significant strides toward becoming more competitive in its product offerings. Several AI hyperscalers are starting to deploy more AMD products, which has caused many investors to assume that AMD is winning some ground in data centers versus Nvidia. But that's not the case.

During Q2, AMD's data center revenue rose 107% year over year to $6.7 billion, so clearly it's trending in the right direction. However, AMD has a much more diversified business than Nvidia, and right now, diversification is hurting AMD. Data center products are the only place to be right now, and AMD's 50% overall revenue growth rate to $11.5 billion shows just how slowly the other parts of its business are growing compared to data center.

Nvidia is a much larger company, and its data center business grew 117% to $89 billion in its most recent quarter. Nvidia is both larger and growing faster, so the AMD-catching-up thesis isn't entirely accurate. AMD may be getting to the point where it's somewhat even with Nvidia, but the AI community still prefers Nvidia hardware. Overall, Nvidia's revenue grew at a 106% pace to $96.2 billion.

Nvidia is still the stronger company overall due to its focus on data centers. With both AMD and Nvidia projecting that the AI build-out will last through at least 2030, we're still in the early stages of the massive spending spree. So, Nvidia's positioning will help it thrive as a company overall versus AMD. However, this isn't reflected in their valuations, and this is the metric that points to Nvidia being the far better buy.

AMD has a ton of growth baked into the stock price

If we utilize next year's earnings projections to value the companies, a clear pattern emerges.

AMD PE Ratio (Forward 1y) data by YCharts

If both companies hit next year's earnings projections, Nvidia will trade at 13 times earnings, while AMD will trade at 33.5 times earnings. I would argue that about 30 times earnings represents a fair stock price to trade at, and AMD would be hovering around that level. However, to get there, AMD's stock price would need to stay flat between now and then.

On the flip side, Nvidia's stock would need to more than double. In fact, Nvidia's stock trades at 27 times earnings right now. Because AMD hasn't reported Q3 results yet, this essentially tells investors that there is more than a year and a half's worth of growth baked into AMD's stock price relative to Nvidia's.

That's a huge premium to pay for a company that frankly isn't doing as well as Nvidia. I think this clearly tips the favor in Nvidia's favor, and it is by far the better stock to buy right now.

We'll see if AMD's revenue growth continues accelerating, as it reports Q3 earnings on Nov. 3. AMD's growth rate needs to continue rapidly accelerating; otherwise, it risks being left behind by Nvidia. Furthermore, it really needs to outgrow Nvidia to show the market why it deserves the premium. If it cannot, I wouldn't be surprised to see the stock sell off as investors dump AMD and rotate into Nvidia.

Keithen Drury has positions in Nvidia. The Motley Fool has positions in and recommends Advanced Micro Devices and Nvidia. The Motley Fool has a disclosure policy.