Core Viewpoint - Advanced Micro Devices (AMD) has significantly outperformed NVIDIA in the semiconductor sector, with AMD shares rising over 45% year-to-date and more than 80% in the last three months, while NVIDIA's stock has lagged behind despite its dominant market position in GPUs [2][12]. Group 1: Market Performance - NVIDIA became the world's first $4 trillion company earlier this year, driven by a 30% year-to-date gain [1]. - AMD's stock has increased by over 45% in 2025, surpassing NVIDIA's performance [2]. - NVIDIA controls 92% of the desktop and laptop GPU market and 80% of AI training chips, while AMD's share has decreased from 15% to 8% [2]. Group 2: Regulatory Impact - NVIDIA faced regulatory challenges, including export controls that resulted in a $4.5 billion excess inventory charge in Q1 2025 [4]. - AMD also incurred an $800 million excess inventory charge due to similar export controls, but has since benefited from the lifting of these restrictions [5]. Group 3: Growth Opportunities - AMD's diverse product pipeline, including the successful MI300 chips, has contributed to its growth, achieving $1 billion in sales within two quarters [6]. - In Q1 2025, AMD reported a 57% year-over-year revenue growth in its Data Center segment and a 68% growth in its Client segment [6][10]. - AMD's investments, including a $4.9 billion acquisition of AI infrastructure provider ZT Systems, position the company for future growth [7]. Group 4: Financial Comparisons - AMD reported $7.44 billion in Q1 2025 earnings, a 36% year-over-year increase, while NVIDIA reported $44.06 billion in quarterly revenue, representing a 69.2% year-over-year growth [10][9]. - AMD's gross margin guidance for Q2 2025 is 43%, which is lower than NVIDIA's gross margins of 61% despite the latter's inventory charge [11]. Group 5: Market Sentiment - AMD's outperformance is attributed to a combination of factors, including less negative impact from export controls, a wider product pipeline, and lower earnings expectations compared to NVIDIA [12]. - Despite AMD's current performance, analysts have rated it as a Moderate Buy, indicating that there may be better investment opportunities available [14].

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]