3 Problems for the Stock Price of Nvidia Rival AMD

Advanced Micro Devices (AMD) has been a strong performer in the semiconductor industry, but its stock price has been underperforming compared to its main rival, Nvidia (NVDA). While AMD has made significant strides in the CPU market, taking market share from Intel, its stock price has not kept pace with Nvidia's. Here are three problems that could be contributing to AMD's stock price underperformance.

1. Perception of being behind in AI performance: Analysts and market observers perceive AMD to be one year behind Nvidia in terms of AI performance. This is due to Nvidia's product pipeline, led by the new Blackwell chip, being viewed as one year ahead of AMD. This perception is seen as holding back market share gain opportunities for AMD (Source: Article "3 problems for the stock price of Nvidia rival AMD"). This perception is negatively impacting AMD's stock price, as investors are concerned about AMD's ability to compete in the AI arms race and gain market share from Nvidia.
2. Valuation and growth potential: Despite the perception of being behind in AI performance, AMD's stock is considered attractively valued based on its growth prospects. Its price-to-earnings-to-growth (PEG) ratio is a low 0.31, indicating that investors can buy shares at a relatively cheap price given the company's expected growth (Source: Article "3 Artificial Intelligence (AI) Stocks to Buy in 2025 That Could Be Better Picks Than Palantir"). However, AMD's higher valuation compared to Nvidia and other AI stocks may contribute to its underperformance, as investors may be hesitant to pay a premium for a company perceived to be behind in AI performance.
3. AI-focused product roadmap: AMD's AI-focused product roadmap appears to be slightly behind Nvidia's, which could potentially hold back market share gain opportunities for AMD in the AI sector. While AMD's chips are still expected to enjoy strong demand thanks to AI-fueled data center growth, the perception that Nvidia is ahead in AI performance may limit AMD's market share gains. This perception is a key factor driving AMD's stock price, as mentioned in the article by Wedbush tech analyst Dan Ives.



In conclusion, AMD's stock price underperformance compared to Nvidia can be attributed to several factors, including the perception of being behind in AI performance, valuation and growth potential, and the AI-focused product roadmap. While AMD has made significant strides in the CPU market, its stock price has not kept pace with Nvidia's due to these perceived weaknesses. Investors should consider these factors when evaluating AMD's stock price and potential for future growth.