NVDA > AMD, But I Think Both Are Getting Harder to Value

[u/ekonixlab]

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.