Is AMD Stock Finally Better Than NVDA Stock After a 36% Decline?

Advanced Micro Devices (NASDAQ:AMD) stock has tumbled 36% from its 52-week high of $211 in March and trades around $135 as of writing. The decline has been driven by disappointing earnings and guidance that fell short of Wall Street expectations. This dip has some investors wondering if now is the time to buy AMD on the cheap. However, a closer look at AMD's competitive position and growth prospects compared to rival Nvidia (NASDAQ:NVDA) suggests the choice may not be so clear-cut.

Before we get into why AMD stock declined, let's first take a glance at its Q3 results.

However, the Q4 guidance disappointed analysts:

• Forecasted Q4 revenues between $7.2 billion and $7.8 billion, below the consensus estimate of $7.55 billion.

• This guidance miss caused a 13% stock drop over two trading days.

These headwinds have soured market sentiment on AMD in the near term despite the company still growing revenue by 18% year-over-year in Q3. The question is whether the 36% pullback represents a buying opportunity for a quality company facing temporary issues or a sign of tougher times ahead. But first, let's look at what kind of competition AMD is facing.

Nvidia is AMD's biggest competitor—we can all agree on that. That said, there are some differing opinions about how both companies could end up in the long run.

Nvidia is focusing more on high-margin AI chips, whereas AMD is trying to undercut it and offer more value. I personally see it as something copied from AMD's playbook in the CPU market—where AMD slowly and methodically caught up to Intel—but it never managed to dominate it.

Nvidia currently has an edge over AMD in the high-end GPU market. It has AI features like DLSS but, AMD offers very competitive performance for the price with its RX 7000 series, especially in the mid-range.

Nvidia holds a clear lead with its GeForce RTX series—particularly the RTX 4090—in terms of raw gaming power and ray tracing capabilities. AMD’s Ryzen processors are highly competitive but do not challenge Nvidia’s dominance in the GPU space.

But again, this doesn't really matter much. Analysts care much more about dedicated AI products than anything related to gaming.

Nvidia also leads here with its H200 Tensor Core GPUs, which are widely adopted for large-scale AI training tasks. AMD’s Instinct MI300X is competitive but still lags behind Nvidia in terms of market share.

AMD Instinct MI300X: The price of the AMD MI300X AI accelerator ranges between $10,000 and $15,000 depending on the customer and volume of purchase. For instance, Microsoft reportedly pays around $10,000 per unit.