The Motley Fool·2025-12-04 16:35Core Viewpoint - The competition between Nvidia and AMD in the AI chip market is intensifying, with AMD showing signs of significant growth and potential to outperform Nvidia in the near future [1][3]. AMD Performance and Outlook - AMD's revenue increased by nearly 35% in the first nine months of 2025, reaching $24.4 billion, with a projected total revenue of $34 billion for the year, marking a 32% increase from the previous year [4][6]. - AMD's management anticipates an annual revenue growth rate of over 35% for the next three to five years, a notable improvement from the 21% growth rate of the past five years [5]. - The company has gained traction with its Instinct data center GPUs, which are being utilized by major clients like Meta Platforms, Microsoft, and OpenAI, with the OpenAI deal potentially adding $36 billion to AMD's revenue [6][7]. - Analysts expect a 31% increase in AMD's revenue for 2026, with potential growth to $46 billion if the company achieves its projected CAGR of 35% [8]. Nvidia Performance and Outlook - Nvidia reported a 62% revenue increase in the first nine months of fiscal 2026, totaling $147.8 billion, and is projected to close the year with $213 billion in revenue, a 63% increase from the previous year [10][12]. - Despite impressive growth, Nvidia's growth rate is expected to slow down due to its already high revenue base and increasing competition from companies like AMD [12][13]. - Nvidia trades at a premium with a price-to-sales ratio of 23, which is double that of AMD, and its market cap could reach $6.3 trillion if it maintains this multiple [15]. Competitive Landscape - AMD's upcoming MI400 series of data center GPUs and partnerships with key players could enhance its competitive position against Nvidia in the AI chip market [7][9]. - The market may reward AMD with a higher sales multiple due to its accelerating growth, while Nvidia's premium could diminish as its growth slows [16].