AMD 55 倍的远期市盈率相对 Nvidia 约 18-19 倍明显偏高，在当前价位下，风险回报比更支持买入 Nvidia 而非加仓 AMD。

Today I want to take a closer look at two of my favorite companies, Nvidia and AMT. He came in here and said, "You know what? Let's talk about AMD and Nvidia, but you have to choose one at the end of the episode. Who would you buy at these prices?

we'll talk about Nvidia versus AMD. might even talk about Nvidia versus Broadcom in the near future. I do know that Nvidia is your your favorite although you do own AMD as well and I am now as of right now fully in AMD. Couple of shares of Nvidia.

The high double digit growth, which is something we've we've heard from AMD for quite a while. We expected to grow at high double digits. We don't really know what that means,

We see other players do that but no one is doing it all themselves right there. They either have to find partners. We saw AMD kind of do partnerships with Cerebras.

I think Nvidia has talked about 40 billion of of potential sales per gigawatt where the other two competitors that have shared which I think have been AMD and Brocom they just tell us teens or double digits right they don't give us a full number is the only one giving it and I wonder if they're just scared to tell us why the the actual number because Nvidia is just baking so much and I think that has to go a lot with innovation.

If I was a bank and you told me, "Hey, look, I'm going to use this money that you're going to give me to have this GPU and here's the data that this type of GPU can be for the past 8 years has been running on A100s and all this and has still maintained price or here's a new player Broadcom with an ASIC or AMD with the full Rexdale system now with the MI450.

There's not enough data set. I would say if you want the better rate, you're going to buy Nvidia GPUs.

So it it's not necessarily a bearish point for the other companies like but it's they don't have the data, right? AMD really came out with the MI300 just like 2 3 years ago. They don't have really anything much before that to really be able to showcase data.

What's what's to be bullish about this company? I mean AMD at the time of recording I think is worth around $8 trillion right now which is insane because I remember when I started covering AMD investing in AMD stock was at around $100.

So valuation wise way way lower than where we're at right now.

It was always a laughing stock because of why buy AMD when you can buy Nvidia. And back then the story was quite simple actually. It's not an apples to apples comparison but it was like buying Nvidia super early on in this super cycle.

And that's exactly what we've seen happen with AMD.

Although Nvidia being Nvidia, the growth rates there are are still mind-blowing but we have seen AMD consistently grow faster and faster take the large chunk of the overall revenue.

Gaming has taken a hit but that's across across the industry embedded finally finally is taking is taking off again which is a high margin business for them but then also clients the CPU side of things server CPUs all of that also started to accelerate out of nowhere so for AMD the mix here the tailwinds have been have been incredible for them

yes there is huge demand for let's say non maybe non-Nvidia solutions so AMD came out with MI300 series which was still way behind what Nvidia was offering especially also on the software side of things but again things were moving in the right direction then they announced the MI400 series and that's that's happening actually right now the ramp up is going to happen probably later this year is really when they're going to start to to ramp up and that's a real competitive product that yes but the revenue growth is expected to accelerate from here profitability is expected to get better from here when you look at free cash flow for AMD that's also expected to increase significant ificantly over over the next couple of quarters over the next couple of years.

They themselves have increased their total addressable market by 3x over a span of what 12 months or so maybe less than less than 12 months they're expecting to generate over $20 of earnings per share.

Now we're in at the end of 26. So over the next two to four years or so and they say exceeding and they're well on track to do that. So, I would assume it's going to be maybe even closer to $25 per share by maybe 2028 or so.

And so, perfect storm for AMD, especially now that CPUs are getting a hell of a lot more attention than maybe a year or two ago because of Agentic AI, and they're perfectly positioned to capture a a chunk of that total addressable market.

So, with AMD, it's really has been over the past year, year and a half or so a a perfect wave that they have been riding and honestly it doesn't seem like it's stopping anytime soon.

The question then becomes how much of it is priced in.

one thing that you mentioned right this is a stock that I mean if you've been an investor you've been listening even the past 5 years them talking about the evolution of AI when chat GPT what they were working with and this is why I lo I love investing and it's why like the money in the portfolio that I have is money I don't need anytime soon and AMD was telling you right 2023 what they were building the MI300 the MI350 the MI400 that they were going to wake up into this market

Right? It's like, oh, 4% in 2 years. But then it's like the company tells you and eventually the market wakes up and sees that all happening. And then see, a good portion of the gain is coming mainly for like the past 6 months, the past 6 months.

But the company has told you this over and over and over again.

Now, AMD also posted earlier today, Neil, that they are sharing a behind the scenes of building the AMD Helios. So this is the big product that you were discussing that's expected to be released expected to be shipping now at the end of September I believe is what they mentioned their last earnings to be able to see this video I believe it gives a great indication that everything is moving good with the production and the shipments of them

revenue is expected to grow especially especially in December the December quarter as that's when Halos really starts to begin I personally believe the market is underestimating the growth I think it's actually going to be much higher because they have big partners, right?

We have they have partnerships with OpenAI, with Anthropic, and with Meta Platforms and all those players are seeing a massive demand in their AI innovations and I think they're going to need a lot and a lot of compute.

So, as long as they're able to work really good with the supply chain players that they have, I think these numbers are going to completely outperform the market.

Now, Neil, I think you mentioned a lot of the growth opportunities for AMD. If I want to mention one that I think is really impressive, it's with their technology. AMD is extremely strong with Chiplet Innovation, right?

Chiplet Innovation is one of their long suits. They've actually developed a lot of the tools in partnership with TSMC that we have right now that other competitors are using.

And that chiplet continues to grow cuz with Meta, right, with Meta, they are selling them the MI450, but it's a variant of the MI450. Meta said, "Hey, look, I actually wanted to go this and this way."

So, it's like they're mixing a mixture of ASIC and GPU together. And I think that's a massive opportunity that not other players can do, right? Not many players can do. They're becoming that middle person between Broadcom and Nvidia.

That's going to continue. And for them having this chiplet technology and architecture, the way they design these chips, it allows them to be able to do that with other players.

Enthropic is I'm I think going to look, hey, you did this for Meta. Let's actually think of a variant of maybe the MI4 500 that might be extremely good for me. OpenAI maybe we'll do the same thing a version of the MI500 that works for me extremely well.

So, so yeah, I'm pretty excited and Lisa Sue is just a goat. I mean, I think she's she's a killer. But I I if there was one bullish opportunity that I think the market forgets is just the innovation that they have with the chiplet and I think that goes a long way in the current ecosystem.

Let's jump into some of the risk you you are considering when when you look at AMD right now.

I think we covered the the bullish parts here and I think like like you said the fact that they are sort of a hybrid player could definitely help them because we have seen the growth that that Broadcom is expecting. So it it definitely bodess well for AMD.

Now, part of the bullish that that turns maybe into a small bearish part is if they need to grow super fast to justify the valuation, they need to make sure that the supply chain allows it.

Now, we know that they've been working to unlock more supply, but sometimes things are just out of their hands, right? We know the growth is coming, but how much of that growth can you recognize as soon as possible, which would then give you more room to grow in the future, right?

We know that the MI400 series is going to ramp up, but and there is an insane amount of demand for CPUs as well, but in order to recognize tens of billions of dollars in revenue, the supply needs to be there.

You should be able to try and sell as much as possible. But what we've seen with a lot of these companies is that they're always trying to catch up. They're always trying to catch up.

I think AMD is definitely getting there. I'm also I agree with you. I think they will beat the expectations. The question is by how much? Cuz right now we are looking at a stock that is trading at a 4p of 55 times compared to an Nvidia which is closer to what did you say 18 19 times.

But still we know that forward expectations are what analysts think about it as of today. two months down the line that can completely change and suddenly we might be looking at a forward P of 40 times who knows right so it's more with AMD it's less about execution although execution here is key it's more about the the price that you're paying I guess a lot of it is baked in but if they can surprise and come out with really like we see with Nvidia 2 three years ago when they literally beat Wall Street by by 10 15 20% or so every single time I think this thing can can continue to run for for the foreseeable future.

Yeah. Yeah, I agree. Neil, I think if if there was a big bearish case for AMD, to me it would be just devaluation, right? I many people might say what happens if we start to see maybe more players do the SpaceX route where they go exclusive Nvidia.

I don't think many players are going to do that. I do think they like the the optionality, right? I think the optionality is very important for them cuz you don't want to be locked into a vendor with the power data center.

They the uh uh AMD is locking in power. I forget what company they're working with, but they've locked in like 500 megawws and they're potentially the they have the opportunity to expand to 2 gawatt once that builds up even further. They're moving in the supply chain.

Right. To me, the biggest bearish case would be the valuation and with valuation is exactly what you mentioned, expectations that come with the valuation because those come out of hand.

But the second thing is media running with the MI Helios rack is going to be the first time they have a rack scale solution. I don't I think there's the opportunity and possibility that we might see some reports Helios rack is overheating but Helios rack is difficult to install.

There were some issues with the Helios rack that could create a negative sentiment towards the stock.

I'm not bearish on that because I believe they're going to be able to figure out. They have a great team. I'm just more a risk of the volatility and the way the market can react to that.

So, I wouldn't be surprised if I saw something like that and the market completely flips on AMT for a little while.

Corientic was the company by the way. I would feel safer buying Nvidia than AMD. Despite my large position in AMD, I would agree that if I were to buy one of the two today, I would pick Nvidia purely because of yes, the growth potential.

Still, the valuation, the valuation that you're getting right now is in my opinion ridiculous and that's why I would pick it.

That doesn't mean that we think that AMD will do badly. Just if we look at riskreward as of today, if we had zero is zero shares, I tend to lean towards an Nvidia right now.

Yeah. And and I think that's an important point, right, Neil, about the risk-to-reward because there's probably been great opportunities, and I'm pretty sure if you go back to our channels, there's probably times when AMD had this forward PE ratio of roughly 22, 20, whatever, where we mentioned the other way.

And risk-to-reward is a really important portion of how we look at our investments. It doesn't mean that one is better than the other. It doesn't mean that we don't think AMD could go higher.

AMD could still go higher than here. But if we were to put new money into our portfolio, where will we feel safer with that money right now? And it seems we both do with Nvidia.

AMD bulls, let me know how much you hate us right now on the comments below.