nvidia (NASDAQ: NVDA) It essentially owns the data center computing market, which is a big deal considering hundreds of billions of dollars are spent on artificial intelligence (AI) infrastructure. Nvidia is one of the major benefactors of this investment, but some of its competitors like AMD are (NASDAQ:AMD)there is also profit.
However, while the lead that Nvidia has overcome looks unattackable, all they need is one innovation, and AMD could potentially be the neck and neck of Nvidia.
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So, which of these two is AI stock in 2025?
Nvidia’s lead in the data center market may not be overcome
Nvidia’s GPUs and software have become the industry standard for data centers. AMD’s GPUs look like they can compete on paper, but Nvidia’s software Cuda makes it stand out. This software allows the GPU to process multiple calculations simultaneously, and handle the pure computing tasks needed for AI computing.
The industry is basically using CUDA software and AMD’s ROCM, so it’s unlikely that AMD will be able to overcome Nvidia’s lead in data center races. If your infrastructure is already set up, the switching cost of moving from one supplier to another is a major consideration and is the main hurdle for anyone to switch.
Nvidia’s lead against AMD can be seen in both finances. Each has its data center division, and Nvidia’s lead is very impressive. In the fourth quarter of 2024, AMD data center revenue was $3.9 billion, up 69% year-on-year. Nvidia has not yet reported fourth quarter results as its financial calendar has been shifted for a month. As a result, using AMD’s Q3 results will give you a better comparison.
In the third quarter, AMD data center revenue was $3.5 billion, up 122% year-on-year. These are impressive results in themselves, but are pale compared to Nvidia’s.
In the third quarter of 2025 (October 27), Nvidia data center revenue was $30.8 billion, up 112% from the previous year. This shows that Nvidia’s data center business is about 10 times larger than AMD, and this is a big lead. We’ll be looking at the results of Nvidia’s second quarter when we report on February 26th, but with all the talks from the leading tech companies on AI spending, many people may report it.
Nvidia has built a massive moat with huge switching costs. This prevents AMD from hiring meaningful amounts of data center businesses. However, if AMD is fairly cheap in stock, then the data center business is still growing strong and far less than NVIDIA, which could be a good reason to invest in AMD.
AMD does not have discounts on Nvidia
Both companies are completely profitable, so using revenue-based metrics makes sense for price-to-revenue (P/E) ratios.
NVDA PE ratio data by YCHARTS
From this perspective, AMD stocks look much more expensive than Nvidia stocks. However, it is also a good idea to use a forward P/E ratio as both companies are experiencing strong growth and AMD’s overall profits are set to improve throughout 2025.
NVDA PE ratio (forward) data by YCHARTS
From this perspective, AMD is cheaper than Nvidia. However, the discrepancies between these two rating levels can be largely due to company-wide growth. This difference seems reasonable as NVIDIA is expected to increase revenue by 52% in fiscal year 2026 (ends January 2026), and AMD is expected to grow at a 24% pace .
Nvidia is growing faster now and dominates the most important computing market today. AMD is still a great company, but I don’t think there’s a reason to own AMD more than Nvidia. Best in class stocks are usually better at larger margins than their peers, especially when starting with similar valuation points.
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Kizen Drury has a job at Nvidia. Motley Fool features advanced microdevice and Nvidia, and is recommended. Motley Fools have a disclosure policy.
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