AMD vs. Nvidia: Which AI Stock Will Outperform in 2026?

Advanced Micro Devices (NASDAQ: AMD) or Nvidia (NASDAQ: NVDA) -- which one to buy? It's a timeless argument, whether you're talking about gaming GPUs or artificial intelligence (AI). Nvidia has been the biggest winner overall, rising nearly 1,110% since 2023 compared to AMD's 209% gain.

However, since 2025, AMD has been the better pick, rising 65% versus Nvidia's 30%. While Nvidia has established a strong foothold in the AI arena, AMD looks to be clawing back. Which is the better stock for 2026? Let's find out.

Image source: Getty Images.

Nvidia is growing faster

The primary way both companies compete in the AI space is through their graphics processing units (GPUs), which are perfectly suited to process complex workloads like AI. Nvidia's full stack outperforms AMD's, so it was the clear choice at the start of the AI revolution.

However, AMD has improved its offerings as of late, and it may be enough of an improvement to warrant switching to some AMD equipment. Furthermore, AMD's products are far cheaper than Nvidia's, so when capital budgets get tight, AMD may see more of an adoption.

However, Nvidia is still king. During AMD's Q4, its data center revenue rose 39% year over year. If Nvidia reports 39% data center revenue growth for Q4, the stock would crater alongside the rest of the stock market. Expectations are far higher for Nvidia because it has done far better.

While we don't have Q4 results for Nvidia yet, we know that Q3's data center growth rate was 66%. Companywide in Q3, Nvidia grew at a 62% pace. For Q4, Wall Street analysts expect 67% growth. This means data center revenue should likely increase around 70% year over year, far greater than the growth AMD is experiencing despite its much smaller size.

This gives the edge to Nvidia in this analysis, but what about valuation?

AMD is expensive for the growth it's delivering

You'd think that AMD's stock would be cheaper due to it being in second place and growing more slowly, but you'd be wrong. AMD trades for 30 times forward earnings, while Nvidia trades for a mere 23 times forward earnings.

NVDA PE Ratio (Forward) data by YCharts

That's a decent price discrepancy, and I'm not sure of why you'd want to buy AMD stock over Nvidia's when it's growing slower and more expensive. As a result, I think Nvidia is a no-brainer pick as to which one will outperform in 2026, and investors should position their portfolio accordingly.

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.