Image source: NVIDIA <\/p>\n
This year, the Nvidia (NASDAQ: NVDA) share price has been on a tear. A rally of 56% over the past 12 months reflects soaring demand for artificial intelligence (AI) chips. With both revenue and earnings climbing by more than 80% year on year, Nvidia now commands a staggering $4.43trn market cap, making it the world\u2019s largest company \u2014 nearly twice the size of Amazon.<\/p>\n
To boost things further, the major chip maker has reportedly agreed a deal with the US government to sell its H20 AI chips to China \u2014 subject to a 15% levy on all related revenue. While this allows it to maintain access to a lucrative market despite export controls, the levy could compress margins. The financial impact will depend on sales volumes, but strong demand in China may still make the venture profitable.<\/p>\n
Impressive financials aside, there are growing signs that a recovering rival could challenge Nvidia\u2019s dominance.<\/p>\n
In contrast to Nvidia\u2019s massive global stature, AMD (NASDAQ: AMD) is a relatively small player with a market capitalisation of around $300bn. Over the past five years, the AMD share price has gained a respectable but modest 125%, dwarfed by Nvidia\u2019s 1,470% leap.<\/p>\n
Yet the tables appear to be turning.<\/p>\n
AMD\u2019s sales growth is up 27% year on year, and earnings per share (EPS) are up a staggering 109%. More importantly, the firm is ploughing capital into research and development \u2014 its R&D spend now represents 23.55% of revenue, among the highest levels for any tech company on the Nasdaq 100.<\/p>\n
Investor excitement has centred around AMD\u2019s upcoming MI450 chip, the company\u2019s first rack-scale, 72-processor AI server system. It sets out to go toe-to-toe with Nvidia\u2019s Rubin architecture. Some analysts initially speculated that Nvidia may delay Rubin to rebalance the competition, but it has firmly denied this, insisting it remains on track for a 2026 release.<\/p>\n
Even so, AMD is already gaining traction. A recent event saw the launch of its MI350 and MI400 series chips, including the Helios AI server, and it has secured OpenAI as a collaborator in its MI450 design.<\/p>\n
But all this R&D investment brings risk, as it stands to gain or lose based on its MI450 performance. Should the chip underdeliver or fail to gain traction, the share price may suffer just as severely as it recovered this year.<\/p>\n
Meanwhile, the threat of geopolitical upheaval is still a notable concern. The US trade tariffs situation remains uncertain and could upset Asia-Pacific supply chains, potentially hurting both AMD and Nvidia\u2019s profits.<\/p>\n
Demand for AI infrastructure doesn\u2019t show any signs of slowing in the near future. Foxconn, the world\u2019s largest contract electronics manufacturer and a major assembler of Nvidia servers, recently reported strong Q2 results, with profit up 27% to $1.48bn. This result underscores just how hot demand remains.<\/p>\n
From a portfolio standpoint, Nvidia remains a formidable and promising stock but so too is AMD, particularly if the MI450 delivers.<\/p>\n
Given the sky-high demand, I see no reason why both companies can\u2019t profit. Nvidia appears to lead on scale and innovation, while AMD is emerging as a viable alternative.<\/p>\n
For investors looking for exposure to the AI boom, both stocks are worth considering, in my book.<\/p>\n
The post AI wars: is the Nvidia share price under threat from rival AMD?<\/a> appeared first on The Motley Fool UK<\/a>.<\/p>\n More reading<\/p>\n Mark Hartley has positions in Advanced Micro Devices. The Motley Fool UK has recommended Advanced Micro Devices, Amazon, and Nvidia. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.<\/a><\/p>\n Motley Fool UK 2025<\/p>\n","protected":false},"excerpt":{"rendered":"Image source: NVIDIA This year, the Nvidia (NASDAQ: NVDA) share price has been on a tear. A rally…\n","protected":false},"author":2,"featured_media":41954,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[554,733,4308,36354,3352,30324,86,56,54,55],"class_list":{"0":"post-70252","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-artificial-intelligence","8":"tag-ai","9":"tag-artificial-intelligence","10":"tag-artificialintelligence","11":"tag-earnings-per-share","12":"tag-nvidia","13":"tag-share-price","14":"tag-technology","15":"tag-uk","16":"tag-united-kingdom","17":"tag-unitedkingdom"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/70252","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=70252"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/70252\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/41954"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=70252"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=70252"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=70252"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}