The meteoric rise of Advanced Micro Devices (NASDAQ:AMD | AMD Price Prediction) has been a thing of beauty, even after the latest surge in turbulence, thanks in part to the fading of numerous names across the semiconductor industry. Even with the latest slide, shares of Lisa Su’s AI chip titan are up close to 125% year to date or about 480% since March 2025. Indeed, the vertical spike might scream unsustainable bubble to some.
And the higher price of admission (shares going for 165.8 times trailing price-to-earnings (P/E)) is doing the name no favors, especially as investors look for candidates to take profits off of as the technicals start looking nasty, while investors brace for more AI IPOs to land. Most notably, Anthropic, the AI lab behind Claude with Dario Amodei running the show, is a frontrunner, and it could move markets in a bigger way than Space Exploration Technologies (NASDAQ:SPCX).
Nvidia looks like a hands-down winner over AMD, or is it?
When stacked side-by-side with Jensen Huang’s Nvidia (NASDAQ:NVDA), it seems just a bit illogical to see shares of Advanced Micro Devices post another stunning year while Nvidia shareholders patiently wait for that massive bid higher.
With Dr. Michael Burry saying things like this is “the beginning of the end” for the AI trade, it certainly feels like that big breakout for Nvidia stock isn’t coming, after all.
Burry, who views semis as a cyclical commodity, rather than subscribing to that “things are different this time” narrative that points to structural drivers behind semis, is short in all the right areas, and while he’s already made some wonderful, profitable trades in these earlier innings, it certainly seems like the man, who’s also short Nvidia, is getting the popcorn out as volatility intensifies for the summer.
Why Advanced Micro Devices might be the winner in a tougher climate for semis as well
With the Magnificent Seven stocks rising without the semis leading the way, it certainly feels like a crash in semis doesn’t have to drag everything lower. In a prior piece, I noted that the Mag Seven actually stood to benefit as semis faded, as hopes for lower CapEx spend (less money for GPUs) meant more money in the pockets of the firms holding all the cards with the actual power to monetize the technology while forming wide economic moats in the process.
Of course, it’s too soon to say it’s “game over” for the semis, but, in my view, Advanced Micro Devices might be better positioned to outperform as the tides go out. Indeed, Nvidia is the king and Advanced Micro Devices is a runner-up — a distant runner-up.
As the firm captures a greater slice of the market while doubling down on inference and higher-value chips (less cost per token) in a climate that’s rotating from “tokenmaxxing” to something more cost-conscious, it just feels like Advanced Micro Devices is poised to keep marching higher. And once Fed chairman Kevin Warsh raises the bar on interest rates?
I think the value-consciousness within the enterprise could get a big shot in the arm. Whether we reach a point where firms “trade down” to cheaper GPUs, though, remains the big question. Nvidia’s CUDA moat could make its ecosystem too sticky to leave, but who knows? Any way you look at it, the case for the cheaper alternative, I think, hasn’t been this loud throughout the entire AI boom.
How could Advanced Micro Devices keep winning and outpacing the best when it’s still in that distant second spot?
The higher growth ceiling, combined with increased price sensitivity and being on the right side of a rotation, I think, makes Advanced Micro Devices a more compelling buy despite the far heftier price tag on the shares.
Despite recent volatility, analysts aren’t afraid to hike their targets, with KeyBanc recently raising the price target by close to $200 to $725 per share in the past week. That’s some serious conviction.
At the end of the day, AMD chips aren’t going to close the gap with Nvidia anytime soon, but the key thing here is that it was never expected to. As the firm does its best to pass its own bar, my guess is that shares can keep beating those of Nvidia.
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