AMD vs. Nvidia: SpaceX and Tesla CEO Elon Musk Weighs In on His Top Pick

AMD (NASDAQ: AMD) and Nvidia (NASDAQ: NVDA) are recognized as two of the top computing unit manufacturers in the AI arms race. While Nvidia got off to a hot start and dominated the initial build-out, AMD has made up some ground recently, although Nvidia still holds a far lead.

Unless you're familiar with the computing industry, determining which company has the best technology may not be easy. To determine which products are best, sometimes finding a smart voice in the industry is the best approach.

One of the most highly regarded minds in the world is Elon Musk, CEO of both Tesla and Space Exploration Technologies. Both companies are spending heavily on computing infrastructure: Tesla is training its self-driving vehicles on countless hours of recorded driving footage, and SpaceX owns xAI, the maker of the Grok large language model.

Musk knows a thing or two about which computing units he prefers his companies to use, and he just gave a glowing endorsement to one of these two firms.

SpaceX and Tesla CEO Elon Musk. Image source: The White House.

Musk prefers his companies to use Nvidia products

During SpaceX's Q2 conference call, Musk stated:

And going forward, we've decided to build exclusively on Nvidia because we think the Vera Rubin architecture is the best architecture . We think it's the best AI computer, and we greatly value our close cooperation and partnership on many levels with Nvidia. So, we're exclusive to Nvidia.

That's a pretty definitive quote, but what may be lost in that announcement is how impressive Nvidia's next-generation hardware will be. Currently, all the AI breakthroughs and advancements we've seen are on the Hopper or Blackwell architectures. Compared to Blackwell architecture, Rubin provides a tenfold reduction in inference token cost and a fourfold decrease in the number of GPUs required to train an AI model. Rubin GPUs will be more efficient, so AI firms could accomplish the same amount of work with fewer GPUs. But what will most likely happen is that firms will deploy the same number of GPUs to increase computing capacity and lower the cost per unit of work.

That's a huge improvement, and with Rubin chips now in full production and shipping in the near future, Nvidia could see another revenue boost. However, it doesn't necessarily need to be a better stock pick than AMD.

Nvidia is growing faster than AMD

Both companies have recently reported results, so a somewhat apples-to-apples comparison is possible (although AMD's report were about a month before Nvidia). AMD's total revenue rose 50%, while data center revenue increased an impressive 107%. Nvidia outperformed AMD by every measure, as its total revenue rose by 106%, while data center revenue rose 117%.

That pretty definitely scores the growth comparison in favor of Nvidia, but it also has another unique quirk: It's far cheaper than AMD.

NVDA PE Ratio (Forward) data by YCharts

AMD trades at nearly three times the price tag that Nvidia does, which is a huge premium to pay, especially considering that Nvidia's technology is recognized better by one AI CEO and is growing far faster. Even if you value the stocks using 2027 earnings estimates, Nvidia is far cheaper.

NVDA PE Ratio (Forward 1y) data by YCharts

It's rare when investors can buy a company that's doing better on nearly every measure than its competitor at a far cheaper stock price, but that's exactly what the market is handing investors right now. As a result, I think investors should swap AMD shares for Nvidia, if they have any. Or if you're on the fence about which one to buy, I think the answer is pretty clear, pretty definitive, and obvious: Nvidia.

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