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Nvidia (NASDAQ:NVDA) stock’s down 15% since the turn of the year. AMD (NASDAQ:AMD) stock’s down a little further at 17%. Needless to say, 2025 hasn’t been an auspicious one for these two leading chip companies.
While analysts can discuss the merits of both companies’ hardware and software endlessly, today I want to look at the forward stock metrics and see which one is better value.
1. Price-to-earnings ratio
Nvidia’s price-to-earnings (P/E) ratio’s expected to decline significantly over the next few years as earnings grow rapidly. Currently, Nvidia’s trailing 12-month (TTM) P/E is around 38, which is above the sector median. Looking ahead, the forward P/E is projected to fall to about 25.7 in 2026, then to roughly 20 in 2027, and further down to 17.4 by 2028.
AMD, on the other hand, trades at a lower P/E ratio compared to Nvidia. Its current TTM P/E is around 27, and is expected to dip to around 22.4 in 2026, 16.6 in 2027, and 14.1 in 2028.
This suggests that while AMD’s valuation is lower, the market still expects significant earnings growth. By 2028, both companies will have more reasonable valuations, but AMD’s P/E will be slightly lower.
2. Revenue growth
Nvidia’s revenue growth has been extraordinary and is expected to remain strong. For fiscal 2026, its revenue is forecast to reach around $200.9bn, representing a 54% year-on-year increase.
This is followed by continued growth to $247.9bn in 2027 (23% growth) and $289.1bn in 2028 (+16.6%). Despite the slowing growth rate, the absolute revenue figures are massive. These are being driven largely by surging demand in data centres and artificial intelligence (AI) related products.
AMD’s revenue growth is also impressive but on a smaller scale. Its revenue’s expected to grow from $31.2bn in 2025 (21% growth) to $37.6bn in 2026 (+20%), and then to $43.4bn in 2027 (+15.6%).
While AMD’s growth rates are healthy and consistent, the company operates from a much smaller base and thus generates significantly less revenue than Nvidia.
3. PEG ratio
The price-to-earnings-to-growth (PEG) ratio, which adjusts the P/E ratio for earnings growth, provides a clearer picture of valuation relative to growth prospects. Nvidia’s forward PEG ratio’s around 0.73, indicating its valuation is attractive given the rapid earnings growth. A PEG below 1 generally suggests a stock may be undervalued relative to its growth potential.
AMD’s forward PEG ratio is even more attractive, estimated at about 0.7. This lower PEG suggests AMD’s stock price may not fully reflect its expected earnings growth.
4. Net debt
Nvidia has a lot of cash. The company holds $43.2bn in cash and $10.3 billion in total debt, resulting in a large net cash position of nearly $33bn. This strong balance sheet gives Nvidia significant flexibility to invest in growth, weather downturns, or pursue acquisitions.
AMD also maintains a net cash position, with $5.1bn in cash and $2.3bn in debt, leaving it with roughly $2.8bn in net cash. While this is healthy and provides some financial stability, AMD’s cash reserves are much smaller relative to Nvidia’s.
A winner?
Personally, I believe it’s hard to choose between the two. I’m a fan of both, having them in both my portfolio and my daughter’s. I think both are worth investors considering.
This story originally appeared on Motley Fool
