Nvidia vs. AMD: Which Is the Better Artificial Intelligence (AI) Stock for 2027 After the Tech Sell-Off?
- NVDA
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Artificial intelligence (AI) chip stocks have witnessed a brutal sell-off lately, as evidenced by the 20% dip in the PHLX Semiconductor Sector index over the past month.
Not surprisingly, semiconductor stalwarts Nvidia (NASDAQ:NVDA) and Advanced Micro Devices (NASDAQ:AMD) have also been under pressure. While AMD has retreated 15% over the past month, Nvidia has dropped 26%, relinquishing its status as the world’s largest company in the process.
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However, the solid financial performance of both these companies doesn’t justify their recent slide. Both Nvidia and AMD have been clocking robust growth, and they are poised to continue their momentum into the New Year. That’s why I will take a closer look at the prospects and valuations of both companies to determine which one is the better semiconductor stock to buy for 2027.
The case for Nvidia
Nvidia remains the dominant player in AI chips despite intensifying competition. Semiconductor supply chain data provider Silicon Analysts estimates that Nvidia will control 75% of the AI chip market by the end of 2026.
The company has been pulling the right strings to maintain its status as the top AI chip player. It is now designing server systems aimed at enhancing inference performance while reducing costs simultaneously. Nvidia claims that its latest Vera Rubin chip systems consume twice as much power as the previous-generation Blackwell processors but deliver 10x higher performance-per-watt.
Nvidia has begun shipping its Vera Rubin systems in volume to customers. It expects the platform to account for 20% of its data center revenue in the third quarter of fiscal 2027. The company should see a significant ramp in Vera Rubin sales in 2027, which will be a tailwind for its revenue and earnings growth, given the significantly higher revenue it expects from its latest systems.
It is worth noting that Nvidia has already guided for a 70% increase in its fiscal 2028 revenue (which will end in January 2028 and coincide with the majority of calendar 2027). Analysts are forecasting a 71% increase in Nvidia’s earnings per share (EPS) in fiscal 2028, following an impressive 95% jump that’s projected for the current fiscal year.
So, there is a solid chance of Nvidia stock stepping on the gas once again in the New Year.
