Nvidia (NASDAQ:NVDA) is an artificial intelligence (AI) 800-pound gorilla. Demand for that chip is exploding. The company's stock price soared 239% last year and is up about 60% so far in 2024.
But Nvidia isn't the only AI company popular with investors. There's one other company that's particularly popular with the people voters sent to work on Capitol Hill. Instead, members of Congress are scooping up stock in Nvidia's biggest rival.
Partner with Nvidia, Partner with AMD
Nvidia was ranked among the top 10 stocks most sold by lawmakers in 2023. This trend has continued this year, with sell trades outnumbering buy trades by more than 2:1.
that's a completely different story Advanced Micro Devices (NASDAQ: AMD), But. Since the beginning of the year, members of Congress have reported 11 purchases of AMD stock, compared to just three sales, according to Capitol Trades.
The purchase is being made on a bipartisan basis. Democratic Rep. Josh Gottheimer of New Jersey and Republican Rep. Michael McCaul of Texas each made multiple purchases of AMD stock in 2024.
AMD's complaint
Members of Congress must disclose all trades they make, but they do not have to say why they buy or sell particular stocks. However, it's not that hard to see why some lawmakers are attracted to her AMD.
AMD has so far lagged far behind Nvidia in the AI chip market. But the company hopes to take market share from larger rivals, and it may be successful in its efforts.
AMD announced the MI300X AI accelerator and Instinct MI300A accelerated processing unit in December. The company claimed that its MI300X chips can compete with Nvidia's H100 graphics processing units in training large-scale language models. And AMD claimed that its new chip will outperform the H100 GPU in AI inference, the process by which an AI model draws conclusions from data.
Additionally, earlier this month, AMD rolled out its Ryzen line of AI chips for desktops and laptops. The company touted the new chip as “the most advanced x86 processor for AI PCs.” including computer manufacturers, HP and lenovo is expected to announce products featuring AMD's new chips this quarter.
The point is, AMD doesn't need to beat Nvidia in the AI chip market to be a big winner. The demand for AI chips is bound to be huge for years to come, so the second-best companies in that niche will still produce beautiful music for investors.
Is AMD a better AI stock than Nvidia?
Recently, members of Congress seem to prefer AMD over Nvidia. But are they right to feel that way? Is AMD a better AI stock than Nvidia?
Both stocks are expensive based on common valuation metrics. AMD's forward price/earnings multiple is 45.7x, while Nvidia's forward earnings multiple is approximately 34.3x. However, these metrics are only based on next year's revenue projections.
There is good evidence that AMD could grow faster than Nvidia over the next five years. He has been working with Nvidia on AI silicon because technology companies, especially big ones, don't want to be too dependent on one source for their chips. If AMD can offer comparable performance at a lower cost, it could be an attractive alternative.
Nvidia is likely to outperform AMD and maintain a commanding market share lead. But for now, I agree with the politicians on Capitol Hill who think AMD is a stock to buy.
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Keith Speights has no position in any stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, HP, and his Nvidia. The Motley Fool has a disclosure policy.
Forget Nvidia: Lawmakers are scooping up shares of its core rival instead The post was originally published by The Motley Fool
