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Over one year, Nvidia (Nasdaq: NVDA) has been the clear semiconductor stock winner regarding stock performance, increasing its valuation by over 200%. In comparison, Nvidia’s long-standing rival AMD (Nasdaq: AMD) gained a 107% boost over the same period.

However, over the last three months, Nvidia and AMD’s performance has been neck and neck, with Nvidia at 49% gain and AMD at 53% gain. Nvidia took the investing spotlight as the key facilitator of the AI hype, effectively transforming itself from a GPU video gaming company to a data center supplier for Big Tech.

But like in previous GPU war cycles, AMD is not standing still. In addition to the launch of Ryzen 8000 Zen 5 processors and 8000G with integrated NPU (Neural Processing Unit), per Q4 ‘23 earnings call, the company is aiming to “accelerate AI” in the data center market with MI300 lineup

The Instinct MI300X and the MI300A will go directly against Nvidia’s H100 and H200 for AI training and generative AI. For investors interested in semiconductor stock gains, is AMD now taking the mantle for AI-powered growth?

Market Share: Nvidia vs AMD

Regarding data center revenue, Nvidia has achieved 279% growth in Q3 FY24 (delivered in November 2023)to a new record of $14.51 billion. Market research firms Gartner and Moor Insights & Strategy estimate that Nvidia has captured at least 70% of the global AI market. 

According to IoT Analytics, Nvidia dominates the data center GPU segment with a 92% market share, while AMD’s share is only 3%. 

Back in August, Nvidia announced up to 2 million H100 chips shipped during 2024, up more than three times from 2023. This is on top of Nvidia’s 80.2% market share in the discrete desktop GPU market, reported by Jon Peddie Research in Q2 2023.  

Comparatively, AMD’s data center revenue was up 38% year-over-year in Q4 2023. For the fiscal year 2023, this is merely a 7% YoY growth of $6.5 billion. However, AMD’s competitive pricing in the desktop segment led to a 62% YoY revenue increase, owing to the popularity of competitively priced Ryzen CPUs.

For the industrial sector and embedded solutions such as healthcare, telecommunications, and data centers, AMD’s revenue was down 24% from the year-ago quarter. AMD’s acquisition of Xilinx helped the company boost the embedded segment revenue by 17% to $5.3 billion for the full year. 

For Q1 2024, AMD expects flat data center revenue.

Nvidia’s Lead Likely to Continue

Although Nvidia and AMD have traded blows many times since the emergence of the discrete GPU market, Nvidia tends to rise to the top in the long run. Nvidia will likely capture up to 95% of the AI GPU market share. 

With network effects in play, previously pushed by Nvidia’s standards such as G-Sync and DLSS, Big Tech is even more likely than retail to take advantage of such an established player. In January, Mark Zuckerberg noted that his company will integrate 350,000 H100 GPUs by the end of 2024.

So far, in Q3 FY24, this has driven Nvidia’s operating income up 652% year-over-year. Comparatively, AMD’s operating income ending in December 2023 was 68% lower than year-ago. 

Like in the discrete GPU market, AMD’s latest MI300 Series accelerators are cheaper than Nvidia’s counterparts. The company projects this lineup alone will bring in at least $2 billion in revenue. 

According to raw performance data by AMD, these chips outperform Nvidia’s H100 offering significantly. While MI300X can deliver 163.4 teraflops of peak FP32 performance, the H100 SXM can deliver only 68 teraflops (FP32). 

However, Nvidia challenged this claim noting that optimized software can achieve 47% faster performance in real-world scenarios. At the same time, AMD could deliver optimized software for its lineup of chips.

Nvidia and AMD Price Targets

Considering Nvidia’s market share dominance and investor focus, its price-to-earnings ratio of 270 in 2023 is estimated to go down to 59.77 in 2024, per Zacks Investment Research. This is above the market average, indicating strong fundamentals and future growth potential.

Based on 40 analyst inputs pulled by Nasdaq 12 months ahead, the average NVDA price target is $683.26 vs. the current $691. The high estimate is $1100, while the low forecast is $560 per share.

In 2023, AMD’s actual price-to-earnings ratio was 89.28, while its 2024 estimate was 60.84. Based on 36 analyst inputs pulled by Nasdaq, 12 months ahead, the average AMD price target is $194.16 vs the current $173. The high estimate is $270, while the low forecast is $140 per share.

This effectively puts Nvidia’s most optimistic forecast at a 59% gain, while AMD’s forecast is at a similar level of a 56% valuation boost.

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