Nvidia's A Startup With Apple's Margins - AMD's Just Priced Like One

Group 1 - Advanced Micro Devices Inc. (AMD) and Nvidia Corp. (Nvidia) are both trading in the 40x forward earnings range, but their financial fundamentals differ significantly [1][4] - Nvidia boasts impressive financial metrics, including 58% operating margins, 86% TTM revenue growth, and $43 billion in net cash, positioning it as a dominant player in the AI sector [2] - AMD's revenue is rebounding at 21.7% TTM, but it has only a 10% operating margin and is still burdened by legacy businesses that are not benefiting from the AI boom [3][5] Group 2 - AMD's forward P/E ratio of 42.9x is nearly identical to Nvidia's 39.5x, indicating potential misplaced optimism among investors regarding AMD's AI capabilities [4] - The current valuation of AMD suggests it is already competing at Nvidia's level, but the underlying fundamentals do not support this assumption [4][5] - Until AMD can demonstrate scalable AI revenue and improved margins, its valuation may be based more on hope than on actual performance [5]