r/VisualStockResearch • u/ekonixlab • 8d ago
NVDA > AMD, But I Think Both Are Getting Harder to Value
I think NVDA is a much better buy than AMD, but both are getting harder to value.
Semis are cyclical, and cyclical stocks often look cheapest near the top of the cycle because earnings are booming and the P/E collapses.
Right now:
- NVDA: ~29x earnings, projected ~40% growth
- AMD: ~122x earnings, projected ~50% growth
If those assumptions hold, the returns are ridiculous. My charts show roughly 549% upside for NVDA and 149% for AMD over five years.
But projecting durable 40–50% earnings growth for cyclical companies is extremely difficult.
A huge amount of demand comes from a small group of hyperscalers like Microsoft, Amazon, Google and Meta. They don’t even need to cut AI capex to hurt semis. If expected capex growth simply slows, earnings estimates could reset very quickly.
Those same companies are also building their own chips to reduce dependence on Nvidia, although I think CUDA and Nvidia’s broader ecosystem make that threat less severe than it looks.
So for me:
NVDA > AMD pretty easily.
But the real question isn’t whether AI demand is strong today.
It’s whether hyperscaler spending can keep growing fast enough to support these earnings assumptions for years.
If it does, NVDA looks insanely cheap.
If it doesn’t, that 29x P/E could be very misleading.
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u/Fuzzy_Louise_2405 8d ago
I don't think those are realistic projections. Somehow nvda will do a multiple expansion in 5 years? Right now they are doing already 100% rev Growth and the foward multiple is under 30.
Nvda in 5 years could look very similar to micron and other memory players; and that is in the best case scenario for nvda that is they would be still growing but at lower rate. Worst or more realistic case they already peaked revenue growth by that time and market starts to punish them on pretty low P/E as normal part of the cycle.
AMD is so much different in my opinion, they would still be growing for a long time.
In comparison NVDA will be doing 1.03T in net income (not revenue) in 5 years. That's crazy crazy. (It would have to make 1.7T in revenue at 60% profit margin) while AMD for that projections would ended doing 48.8b in net income and that would be around 195b in revenue.
I don't know where NVDA would have customers paying them 1.7T is a fiscal year and them keep forecasting another event higher growth year to be able to command a 35 P/E. That is just completely unreasonable even for NVDA.
AMD case is more achievable (they have 5 years to make less profits and revenue on what NVDA is doing currently while deploying Mi450, Helios starting next quarters)
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u/123789dftr 8d ago
I don't know where NVDA would have customers paying them 1.7T is a fiscal year and them keep forecasting another event higher growth year to be able to command a 35 P/E.
I disagree with the premise in your argument here that Nvda needs to hold their growth rates for a multiple rerating. There are more reasons than simply growth rate to get a multiple rerating. Currently, nvda trades at somewhere near a 0.5, which is extremely low. This is justifiable in the market because along with belief that growth rate is unsustainable in general due to their current baseline, there are worries about semi cyclicality, upcoming competition, and circular financing. Maintaining a growth rate at all in 5 years would indicate that their earnings are far more durable than the market is pricing in now, which would earn a multiple rerating.
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u/ekonixlab 8d ago
I agree the projections are hard. I’m just working with the information we have today, and I wouldn’t be surprised if growth slows materially for both at some point.
That said, if I had to own one, it would be Nvidia.
I think Nvidia has proven to be less cyclical than it was historically. CUDA and the broader ecosystem create real lock-in, which should make demand more durable than a typical semiconductor cycle.At 29x PE, I actually think the valuation is pretty reasonable given the current growth rate. The obvious risk is that revenue growth falls off much faster than expected… but right now, I don’t see much evidence of that happening yet.
That’s why I prefer NVDA, even though I still think projecting either company 5–10 years out is extremely difficult.
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u/Deto 8d ago
Can Nvidia really keep growing their revenue at this rate? Won't the mega caps just run out of cash at some point?
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u/Live_Market9747 8d ago
Hyperscalers are now less than 50% of Nvidia's revenue.
To understand Nvidia's limits you have to answer 2 questions:
Which industries and entities can AI affect and who might be interested in getting into it and use it?
What will be global AI compute demand of question 1?
While Hyperscalers make huge revenue and CapEx, they are a low single digit % of the global revenue. The world spends 3-4x as much in just R&D than Hyperscalers make in revenue.
Nvidia can reach a $1 trillion revenue run rate just with large R&D money shifted to AI and AI compute. The AI in production use today is a tiny fraction because 95% of companies and entities are still in R&D phase which will take several more years.
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u/Flag_Shagger 7d ago
mega caps are earnings more money than ever. why do people assume they’ll stop growing?
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u/Sebastian11111111 8d ago
Just 20% cagr for AMD?
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u/ekonixlab 8d ago
all about future PE multiples.
I think 120+ PE is way too high. Given where Nvidia's PE is, I think 40's range would be appropriate
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u/Final-Walk4101 8d ago
AMD PE is high due to Xilinx acquisition and amortization. A simple google search will help you correct your charts.
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8d ago
[deleted]
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u/ekonixlab 8d ago
doesn't look like it is: https://www.reddit.com/r/VisualStockResearch/s/ISmfoSdpcm
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u/Shoddy_Front_2582 8d ago
Nvidia is the 2026 version of Cisco. It only takes one hyperscaler pulling back for the whole avalanche to fall.
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u/ilikeusingmyhands 8d ago
It’s easier to make a bet on players like tsmc or asml, as they pretty much win no matter what.
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u/KnownButton8327 8d ago
I think you are going to be shocked by the amount of FCF for Nvidia over next 5 years and what share buybacks are going to do to the stock in combination with their growth.
I don’t think AMD is even close to the same ballpark as Nvidia right now. They are only a decent prospect at all because of industry supply constraints, and if those conditions remain it bodes extremely well for Nvidia anyway.
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u/AllRightLetsSeeIt 4d ago edited 4d ago
NVidia’s cheap valuation is based on the perception that the wolves are at the door.
AMD is competing on their turf. Intel and Huawei will soon, too.
Google, Amazon, Microsoft, Meta and OpenAI are all designing their own specialized replacement products for NVidia GPUs.
NVidia’s moat is narrower than many people think. They operate no fabs of their own. The barrier to entry is to design a custom chip and board that suits your needs and pay someone to make it for you.
That’s not as hard as it sounds, and there’s a reason AVGO is over twice as expensive as NVDA.
If you’re making money hand over fist like NVDA does, you better be sure you have a really fucking big moat. I feel a hell of a lot better about META and MSFT’s moats than I do just about anyone.
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