Better Buy: AMD Versus Nvidia Stock

Advanced Micro Devices (NASDAQ: AMD) and Nvidia (NASDAQ: NVDA) are two stocks that are often compared. Each makes computing devices, although AMD's product catalog is a lot larger. Both are also heavily involved in the artificial intelligence (AI) build-out, leading to massive growth rates.

However, there can be only one top buy. So which stock is the better buy between the two?

Image source: Getty Images.

AMD's business is more diversified

AMD makes graphics processing units (GPUs) like Nvidia, but also makes central processing units (CPUs), embedded processors, and other data center components. In the first quarter of 2026, about 56% of revenue came from its data center division. That makes AMD a lot more diversified than Nvidia, which is basically a data center build-out boom-or-bust investment.

In Nvidia's latest quarter, over 90% of revenue came from its data center division. That's an extreme concentration, and if the AI build-out were to suddenly cease, Nvidia's business would collapse. While that sounds scary, the reality is that the data center build-out is ramping up and will be going on for several more years. Nvidia, being highly concentrated in this area, will have better growth rates than AMD.

However, being a more diversified business is usually a better thing over the long haul, so I'm going to give this category to AMD.

Winner: AMD

Nvidia is capitalizing on its data center concentration

As mentioned above, the data center build-out is booming, which is boosting Nvidia. For Q1, Wall Street analysts expect nearly 80% revenue growth. Next quarter, they expect 86%. That's an incredible figure considering Nvidia's size, and it showcases how much demand there is for Nvidia's products.

AMD is doing quite well itself. Its revenue rose 38% year over year in Q1, with its data center division increasing 57%. However, that's nowhere close to where Nvidia is growing. Looking ahead, Wall Street analysts project 47% growth in Q2 and 34% in Q3. Nvidia is clearly growing faster, so it's impossible to give the growth category to AMD.

Winner: Nvidia

Nvidia's stock is far cheaper despite its faster growth rate

It's all tied up entering the last category, but this one could be the most important. The best company bought at the wrong price is still a bad investment, so investors must balance strong companies with reasonable prices. I'll be using the forward price-to-earnings ratio to analyze both companies, as I think that's the best valuation measure when a company is growing rapidly (as both of these are).

From this standpoint, Nvidia is far cheaper than AMD.

AMD PE Ratio (Forward) data by YCharts

Nvidia is half the price of AMD, despite its superior growth. This doesn't make a ton of sense and showcases that Nvidia is a far better bargain. Even if you look at next year's earnings projections, Nvidia is still a much better value.

AMD PE Ratio (Forward 1y) data by YCharts

Winner: Nvidia

Nvidia is the runaway winner

Nvidia is cheaper and growing faster than AMD, and it holds a far greater market share. The one leg AMD has to stand on is its diversification. Still, with its data center divisions growing far faster than its other business units, it won't be long before AMD's revenue makeup looks a lot like Nvidia's. This eliminates the one advantage AMD could have, making Nvidia the much smarter stock to buy and hold over the long term.

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.