Advanced Micro Devices‘ (NASDAQ:AMD) stock is up 43% over the past six months. And with the pounds roughly flat against the dollar over the period, this means £10,000 invested then would be worth around £14,300 today.
AMD, as it’s better known, is by no means the best performing stock in the AI-focused sector, but it’s still done very well. So what’s happened?
A competitor of note
Hyperscale customers — companies such as Alphabet, Meta and Amazon who are building huge AI data centres — view AMD as a credible second source to Nvidia for data-centre accelerators.
Its market share varies by product, but on the important opportunity — GPUs for data centres — it only holds a single digit share. More broadly across chips, it appears to have low double digit market share. But remember, this is a huge market. And this has fed through to the financial data.
In Q3 2025, AMD’s data-centre revenue jumped 34% quarter-on-quarter to $4.3bn, while operating income surged 793% year-on-year to $1.1bn. The MI300 chip has been rapidly adopted since its launch in late 2023.
At the same time, Nvidia’s ongoing supply constraints meant cloud customers were actively looking for alternatives. Even modest penetration by AMD into the accelerator market carries enormous profit leverage because GPU margins are far higher than those of traditional CPUs.
Looking forward, the upcoming MI400 series, launching in 2026 with variants optimised for both training and inference, is widely anticipated.
Realistically, it’s not going to challenge Nvidia’s GPU dominance, but the AI infrastructure segment’s expected to grow at a 42% CAGR through 2029. Any market share gains are huge when translated to earnings.
Is it good value?
AMD’s valuation remains relatively attractive but it depends on how you interpret the metrics. It trades at 51 times forward earnings for FY2025, the fiscal year just ended. The figure for the forward 12 months is closer to 32 times.
Medium-term earnings growth’s actually at 45% per annum. With this in mind, we’d come to a price-to-earnings-to-growth (PEG) ratio significantly below one and far below the sector average of 1.7.
The best comparison however, is with Nvidia. It’s trading at 39.5 times FY2026 earnings (FY2026 ending in March). The figure for the forward 12 months is closer to 24.4 times.
Meanwhile, the medium-term earnings growth is at 37% per annum. This also gives us a deeply undervalued PEG ratio when using the 12-month price-to-earnings.
So on valuation, it’s actually pretty close to its peer. They’re both around 0.6-0.7 on the PEG ratio, which typically indicates good value.
The bottom line
Personally, my preference is still for Nvidia. The company has fingers in so many AI pies that its long-term value proposition exists far beyond the sale of hardware. It will undoubtedly play a leading role in the rollout of robotics, for example.
AMD remains an attractive challenger, but its opportunity set is narrower, and for most large-scale AI workloads Nvidia’s GPUs are still the default choice.
I believe both stocks are worth considering.
