NVDA vs. AMAT: Which Semiconductor Stock Is the Better Buy Now?

Core Insights - NVIDIA Corporation (NVDA) and Applied Materials, Inc. (AMAT) are key players in the semiconductor and AI sectors, with NVIDIA leading in AI chip design and Applied Materials in chip manufacturing [1][2] NVIDIA (NVDA) Performance - NVIDIA's revenues surged 62% year over year to $57 billion in Q3 fiscal 2026, with earnings per share (EPS) increasing by 60% to $1.30 [3][10] - The Data Center segment generated $51.22 billion in revenues, accounting for 89.8% of total sales, marking a 66% year-over-year increase [5] - NVIDIA's new GPU architectures, Hopper 300 and Blackwell, are gaining traction, with the Blackwell Ultra and Vera Rubin platforms expected to enhance its market position [4] - A partnership with OpenAI is anticipated to drive long-term demand for NVIDIA's GPUs, reinforcing its dominance in the AI chip market [6] Applied Materials (AMAT) Performance - Applied Materials is a major manufacturer of semiconductor fabrication equipment, benefiting from strong demand in foundry-logic, DRAM, and NAND products [7] - The advanced packaging business is projected to grow from $1.5 billion to $3 billion, driven by high-bandwidth memory (HBM) demand [8] - A restructuring of the pricing program is expected to contribute to a 120-basis point gross margin expansion for fiscal 2026, allowing for increased R&D investments [9] Growth Outlook Comparison - NVIDIA's fiscal 2026 estimates indicate a revenue growth of 62% and EPS growth of 55.2%, with projections for fiscal 2027 showing further growth of 42.2% and 52.9% respectively [13][14] - In contrast, Applied Materials is expected to see only 2% revenue growth and a 1.4% EPS increase in fiscal 2026, with projections for fiscal 2027 at 10.3% and 17.9% respectively [14] Valuation and Investment Perspective - NVIDIA shares have increased by 34.7% year to date, while Applied Materials shares have risen by 57.6% [17] - On the valuation front, Applied Materials has a forward P/E of 26.18, slightly below NVIDIA's 26.54 [18] - Overall, NVIDIA is viewed as a better investment option due to stronger growth momentum and competitive advantages in AI computing [20]