Nvidia (NASDAQ: NVDA) is the 800-pound gorilla of artificial intelligence (AI). The demand for his chips is increasing enormously. Shares skyrocketed 239% last year and are up about 60% so far in 2024.
But Nvidia isn't the only AI company popular with investors, and there's another company that has especially found favor with those voters sent to Capitol Hill to work. Members of Congress are instead snapping up shares of Nvidia's main rival.
Out with Nvidia, in with AMD
Nvidia is in the top 10 of the stock lawmakers sold the most in 2023. The trend has continued this year, with sales transactions outweighing purchase transactions by more than 2 to 1.
Of. it's a completely different story Advanced micro devices (NASDAQ: AMD), although. According to Capitol Trades, 11 purchases of AMD stock have been reported by members of Congress to date, compared to just three sales.
The purchase was twofold. Democratic Rep. Josh Gottheimer of New Jersey and Republican Rep. Michael McCaul of Texas each bought AMD stock multiple times in 2024.
The appeal of AMD
Members of Congress must disclose all transactions they make, but they do not have to reveal why they buy and sell specific stocks. However, it's not that hard to figure out why some lawmakers find AMD attractive.
AMD has so far lagged far behind Nvidia in the AI chip market. However, it is hoping to take some market share from its bigger rival – and could be successful in doing so.
In December, AMD unveiled its MI300X AI accelerator and its Instinct MI300A accelerated processing unit. The company claimed that the MI300X chip holds its own against Nvidia's H100 graphics processing unit when training large language models. And AMD continued to insist that its new chip beats the H100 GPU in AI inference (the process by which AI models draw conclusions from data).
Additionally, AMD rolled out its Ryzen line of AI chips for desktops and laptops earlier this month. It touted the new chips as “the most advanced x86 processors for AI PCs.” PC makers included PK And Lenovo are expected to introduce products with AMD's new chips this quarter.
Importantly, AMD doesn't have to beat Nvidia in the AI chip market to be a big winner. Demand for AI chips should be so high in the coming years that a company playing second fiddle in that niche will still make great music for investors.
Is AMD a better AI stock to buy than Nvidia?
Members of Congress seem to prefer AMD over Nvidia these days. But are they right to feel this way? Is AMD a better AI stock to buy than Nvidia?
Both stocks are expensive based on one popular valuation metric: AMD is trading at a price of future price-earnings ratio of 45.7, while Nvidia's profit margin is about 34.3. However, these figures are only based on profit expectations for the coming year.
There are good arguments that AMD could grow faster than Nvidia over the next five years. Tech companies, especially the big ones, don't want to be overly dependent on one source for chips, and they've stuck with Nvidia when it comes to AI silicon. AMD could be an attractive alternative if it can deliver similar performance at a lower cost.
Nvidia could surpass AMD and maintain its dominant market share. Right now, though, I'm on the same page as politicians on Capitol Hill who view AMD as the better stock to buy.
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Keith Speights has no position in any of the stocks mentioned. The Motley Fool holds positions in and recommends Advanced Micro Devices, HP, and Nvidia. The Motley Fool has one disclosure policy.
Forget Nvidia: Members of Congress are snapping up shares of its main rival instead was originally published by The Motley Fool
