Nvidia (NASDAQ:NVDA) stock found itself in a mini-slump in recent weeks, falling into correction, even as other tech stocks experience their so-called “Nvidia moments.” Though Nvidia could be a relative laggard for a few more weeks or even months as investors digest the recent Fed meeting, I wouldn’t count out the firm as it looks to experience another one of its own “Nvidia moments.”
Key Points
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Nvidia has too much going for it as the Blackwell ramp looks to reignite excitement.
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AMD stock’s sluggish performance and a recent big-name downgrade from Bank of America don’t bode well for the number-two GPU titan.
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And though the massive economic profits to be had in artificial intelligence (AI) accelerators have been understood by numerous deep-pocketed tech firms; I’m not so sure any rivals will have a remote chance of reducing their dependence on the AI king as Blackwell production ramps up. Simply put, Nvidia still has its foot firmly pressed on the accelerator.
AMD: A worthy rival, but the race isn’t getting any closer as Nvidia hits the gas.
Most notable among Nvidia’s rivals has to be Advanced Micro Devices (NASDAQ:AMD), a firm led by Jensen Huang’s first cousin once removed, Lisa Su. As fantastic a job as Su has done in these early innings of the AI race, catching up to Nvidia could be a difficult, uphill battle that spans years. And there’s no guarantee that significant ground will be gained over the GPU giant as it stays in the fast lane while adding new AI tools and other software features to enhance its walled garden further.
With a fast-growing suite and a CEO who may very well be on his way to becoming one of the world’s wealthiest men, I continue to think Nvidia stock will be a better performer than AMD in 2025 and beyond, even as Su and company give their next-gen chips their all.
That said, just because I don’t think AMD stock won’t top Nvidia shares in 2025 doesn’t mean AMD won’t be in for magnificent results of its own, especially if a shortage in Blackwell chips provides AMD an opportunity to step in. With AMD recently betting big on GPU cloud provider Vultr, questions linger as to whether a pick-up in deal-making could help AMD add more rally fuel to its tank.
AMD hit with a downgrade; NVDA upgrades keep coming in.
In a recent note, Bank of America (NYSE:BAC) downgraded AMD stock due to lackluster AI and PC sales in 2025. Undoubtedly, the AI PC has yet to take off in a way that’d give a massive lift to firms like AMD, which is currently sitting at 52-week lows of $119 and change, down nearly 44% from its all-time highs.
Indeed, its relative undervaluation compared to Nvidia (23.9 times forward price-to-earnings (P/E) vs. 30.5 times for Nvidia) makes it a strong candidate for outperformance in the new year. That said, Nvidia still has more wind at its back with Blackwell. And with shares in a correction of their own, the stock isn’t exactly overheated or overvalued.
In a recent upbeat note, Morgan Stanley (NYSE:MS) analysts praised Nvidia for its “potential to rerate” on the back of the “Blackwell ramp in the second half of 2025.” Indeed, Nvidia stock probably won’t stay lukewarm for very long as investors look for early signs of a Blackwell bounce.
Undoubtedly, the Blackwell architecture has the potential to spark another “Nvidia moment” of its own for Nvidia stock as its performance and efficiencies look to put its past-gen Hopper chips to shame.
Reportedly, Microsoft (NASDAQ:MSFT) has been scooping up far more Nvidia AI chips than its rivals. As its Magnificent Seven peers look to accelerate their position in the AI race, one has to think more budget towards GPUs will be in the cards, especially if 2025 is the year of agentic AI and other significant advancements that could raise the stakes (and demand for high-performance AI compute) across the board for all firms in the AI race.
The bottom line
Currently, Bank of America views NVDA stock as attractively valued following the recent bout of “short-term” headwinds. As investors look past the transitory headwinds, I do think 2025 could be another impressive year in the record books for one of the dominant firms that I believe will do a pretty good job of defending its lead in the AI race. Though I’m not against owning AMD for the long haul, I have to side with Bank of America, with its preference for NVDA stock over AMD for next year.
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