AMD Has Leverage Beyond Nvidia’s Current and Emerging Troubles
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I keep buying AMD (NASDAQ:AMD | AMD Price Prediction) because every earnings report gives me fresh proof that the AI buildout needs a second engine, and AMD has become that engine. The stock is up 158.17% year to date. Over the same period, NVIDIA (NASDAQ:NVDA) is down 6.63%. Investors are now asking whether Nvidia’s turmoil will mean lasting wins for AMD. I think it will, and my reasons go beyond Nvidia’s problems.
Four Advantages Hyperscalers Keep Paying For
My case rests on four structural advantages. Each one targets a cost or design problem that hyperscalers and neoclouds face. The first is cost. Lisa Su frames Instinct sales around “tokens-per-dollar” advantages. The second is memory.
AMD says Helios offers “an even larger lead in memory bandwidth and higher scale-up bandwidth than the competition.” The third is openness. AMD contributed its Helios rack design to the Open Compute Project, so buyers avoid getting locked into one supplier. The fourth is breadth. AMD sells both the accelerator and the CPU, and AI agents increase demand for both. Five lead customers, including Anthropic and OpenAI, already run workloads on Helios racks.
Three Data Points Behind Every Purchase
Data Center revenue reached $8.546B, up 97% year over year. Segment operating margin rose to 34% from 25%. Data center now accounts for 64% of total revenue, up from 47% a year ago.
Profits are growing faster than sales. Non-GAAP EPS reached $2.09, up 74%, while revenue grew 45%. That was AMD’s fourth consecutive EPS beat. The CFO expects 2027 operating expenses to grow less than half the top-line revenue growth rate.
Fourth-quarter guidance calls for about $17B, roughly 66% growth at the midpoint. AMD expects 2027 revenue to grow more than 80%. Early Venice demand is “the strongest we have seen for any new EPYC generation.”
Why My Money Skips Nvidia and Intel
Nvidia runs an elite business, with a 75.0% gross margin. Its problems are growing, though. Supply obligations rose to $279.00 billion, partner guarantees run up to $108.5 billion, and customers now take 60 days to pay, compared with 45 days before. Its shares trade at about 35x earnings and are down 9.84% over the past year.
Intel (NASDAQ:INTC) grew its data center unit 78%. Its foundry business still lost $1.85 billion last quarter, though. Intel guides to a 38.0% non-GAAP gross margin, while AMD guides to about 55%. Intel also has more debt, with borrowings at 0.41 times equity, compared with AMD’s 0.071.
What Could Hurt This Position
For income-focused readers, AMD pays no dividend. The stock trades at 135 times free cash flow. Free cash flow fell 70.86% to $554M as inventory rose to $11.463B. A $1,097M customer warrant charge reduced GAAP EPS to $1.46. Sales also depend heavily on a few large customers, and export controls remain a live threat. Any of these could cause real damage if demand cooled.
So far, demand remains strong. Su says “demand is higher than supply,” and AMD built that inventory to support fourth-quarter data center growth of about 50% sequentially.
Why I Keep Adding From Here
Helios production is increasing, Venice is shipping, and AMD is already working with customers on MI500 and MI600. Hyperscalers want a second supplier for AI chips, and AMD is the one I keep buying. The whole expansion also needs power, cooling, and networking behind it, which is why we put seven non-chipmaker suppliers into a free report on the AI infrastructure trade.
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Alex Sirois is a financial writer with experience spanning both retail and institutional investing. He has written for InvestorPlace and held roles at BNY Mellon and Bernstein, giving him a perspective that bridges Main Street portfolios and Wall Street analysis.
Alex holds an MBA from George Washington University and has built his career across multiple industries, including e-commerce, education, and translation — a breadth of experience that informs how he breaks down complex financial topics for everyday investors. His writing is conversational, actionable, and grounded in long-term, buy-and-hold investing principles.
At 247 Wall St., Alex focuses on delivering analysis that is both accessible and useful, with a clear emphasis on helping readers make more informed decisions with their money.
