1 Big Reason AMD Is a Better Buy Than NVIDIA

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Advanced Micro Devices (NASDAQ: AMD) and NVIDIA (NASDAQ: NVDA) have witnessed wildly different fortunes on the stock market this year. There was a time when both stocks were flying high thanks to the cryptocurrency-driven boom. But after that bubble burst last year, AMD has emerged as the stronger performer while NVIDIA has failed to recover.” data-reactid=”11″>Advanced Micro Devices (NASDAQ: AMD) and NVIDIA (NASDAQ: NVDA) have witnessed wildly different fortunes on the stock market this year. There was a time when both stocks were flying high thanks to the cryptocurrency-driven boom. But after that bubble burst last year, AMD has emerged as the stronger performer while NVIDIA has failed to recover.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="AMD data by YCharts” data-reactid=”25″>AMD data by YCharts

It won’t be surprising to see AMD stock sustain its terrific momentum and outperform NVIDIA, as the former enjoys one big advantage over its archrival.

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<h2 class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Graphics cards are proving to be NVIDIA’s Achilles’ heel” data-reactid=”39″>Graphics cards are proving to be NVIDIA’s Achilles’ heel

NVIDIA dominates the discrete graphics processing unit (GPU) market with a share of more than 81%, leaving the rest for AMD. In fact, NVIDIA increased its GPU market share by nearly 15 percentage points last year.

But shrinking graphics card sales meant that the higher market share didn’t do much for NVIDIA’s financial growth. The company’s fiscal first-quarter 2020 revenue fell close to 31% year over year as sales in the gaming segment were down nearly 39%. Gaming is NVIDIA’s bread and butter, accounting for 47% of total revenue.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Meanwhile, NVIDIA's revenue from the "OEM and other" segment, which includes sales of GPUs for cryptocurrency mining, plunged nearly&nbsp;75% annually to $99 million in the first quarter. As graphics card demand fell off a cliff after the cryptocurrency mining wave died down, the likes of NVIDIA and AMD were left with excessive channel inventory that led to lower GPU pricing.” data-reactid=”42″>Meanwhile, NVIDIA’s revenue from the “OEM and other” segment, which includes sales of GPUs for cryptocurrency mining, plunged nearly 75% annually to $99 million in the first quarter. As graphics card demand fell off a cliff after the cryptocurrency mining wave died down, the likes of NVIDIA and AMD were left with excessive channel inventory that led to lower GPU pricing.

Given NVIDIA’s reliance on GPUs for the majority of its revenue, it is still reeling under the impact of an oversupplied graphics card market. AMD, however, has been able to make up for the graphics card weakness thanks to its CPU (central processing unit) business.

<h2 class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="AMD’s CPU gains have been a tailwind” data-reactid=”44″>AMD’s CPU gains have been a tailwind

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Slowly but surely, AMD has been eating into CPU behemoth Intel‘s market share. AMD reportedly held&nbsp;17% of the PC CPU market at the end of the first quarter, according to Mercury Research, up from 12% in the prior-year period. Intel holds the remaining share.” data-reactid=”45″>Slowly but surely, AMD has been eating into CPU behemoth Intel‘s market share. AMD reportedly held 17% of the PC CPU market at the end of the first quarter, according to Mercury Research, up from 12% in the prior-year period. Intel holds the remaining share.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="AMD's market share jump isn't surprising, as its CPUs have been selling much faster&nbsp;than Intel’s. Looking ahead, AMD can further dent Intel’s position thanks to the refreshed lineup of Ryzen chips that will hit the market next month.” data-reactid=”46″>AMD’s market share jump isn’t surprising, as its CPUs have been selling much faster than Intel’s. Looking ahead, AMD can further dent Intel’s position thanks to the refreshed lineup of Ryzen chips that will hit the market next month.

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