AMD Overvalued vs. Nvidia (NVDA) Undervalued...Why Do Stock Valuations Differ?

▲ NVIDIA (NVDA), AMD/AI Generated Image

Stock valuations for AI semiconductor leaders NVIDIA (NVDA) and AMD are starkly divided. Unlike AMD, which surged 141% this year, Nvidia's forward price-to-earnings (P/E) ratio is only 19x, raising the question of whether it is undervalued as a key investment issue.

According to the U.S. investment media outlet 24/7 Wall St. on July 5 (local time), Nvidia's forward P/E ratio was calculated at 19x. AMD's stands at 59x. While Nvidia's stock growth rate for 2026 was only 4%, AMD's surged by 141%.

The high expectations reflected in AMD's stock price are based on the growth outlook for the server CPU market. AMD CEO Lisa Su projected that the server CPU market size will exceed $120 billion by 2030. The estimated annual growth rate is over 35%, nearly double the previous average annual growth forecast of approximately 18%.

Su explained that the proliferation of agent AI is changing the CPU demand structure. As AI accelerator deployments increase, the demand for general-purpose CPUs responsible for data movement and storage, networking, task orchestration, and inference processing also grows. Amazon (AMZN)'s AWS, Google Cloud, Microsoft (MSFT), and Tencent are expanding their adoption of 5th-generation EPYC processors, and Meta Platforms (META) has been named a key customer for the next-generation 6th-generation EPYC Venice and Bergamo.

AMD has also secured AI infrastructure projects with Meta, Oracle (ORCL), and OpenAI. However, the forward P/E ratio of 59x largely reflects expectations of strong performance growth continuing for several years. 24/7 Wall St. pointed out that while a market growing over 35% annually can command a high valuation, the burden could increase if performance falls short of expectations.

Nvidia maintains its dominance in the AI accelerator market and boasts substantial free cash flow, yet its forward P/E ratio remains at 19x. 24/7 Wall St. acknowledged that AMD's high stock price reflects its growth prospects but analyzed that Nvidia offers greater relative value for long-term investment. It also suggested that holding both stocks allows investors to simultaneously invest in the growth of GPUs and CPUs within AI infrastructure.

[Article Summary]

-Nvidia's forward P/E ratio is 19x, while AMD's is 59x; stock growth rates for 2026 were recorded at 4% and 141% respectively.

-AMD projects the server CPU market to exceed $120 billion by 2030, growing over 35% annually.

-24/7 Wall St. acknowledged AMD's growth prospects but assessed that Nvidia offers greater relative value for long-term investment.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*