AMD Stock Price Outpaces Nvidia, But Business Performance Tells a Different Story

Advanced Micro Devices (AMD) has been outperforming Nvidia (NVDA) in terms of stock price, rising 125% this year compared to Nvidia's 20%. However, when looking at the companies' business performance, Nvidia is crushing AMD. In its fiscal 2027 first quarter, Nvidia's revenue rose 85% year over year to $81.6 billion, while diluted earnings per share increased 214%. AMD's second-quarter results were not as impressive, with revenue up 50% and diluted earnings per share increasing 156%. The data center division is driving growth for both companies, but Nvidia's growth was up 92%, while AMD's increased 107%. Despite this, AMD is valued at a high level, trading at 33 times next fiscal year's earnings compared to Nvidia's 17.6 times.

Nvidia is the much larger and faster-growing company, which typically results in better stock performance. However, AMD's valuation has become ridiculous, with an extra year's worth of growth baked into its stock price over Nvidia's. This trend may reverse as Nvidia maintains its dominance while AMD takes time to grow into its sky-high price tag.