AMD Catching Nvidia Or Nvidia Still Key Bellwether? Can We Take Advantage?

$Advanced Micro Devices(AMD)$ gained 9.40% on Wednesday (15 Oct) but $NVIDIA(NVDA)$ lost 0.11%, so if AMD really poised to catch up with Nvidia?

In this article, as I hold both AMD and Nvidia, I would be interested to do a deeper dive into what might be going on with AMD vs. Nvidia lately — and what it could imply for the broader tech rally.

What We Are Observing

• On October 15, AMD jumped ~9.4 % — a very strong single-day outperformance.

• Over the same period, Nvidia was flat to slightly down (–0.11 %).

• This divergence is notable because in recent cycles, Nvidia has often been the lead driver in the AI / chip space, with other semi / compute names following its direction.

I would think it raises the question: is the leadership baton shifting (even temporarily)? Or is this a short-lived rotation or correction?

Possible Drivers Behind AMD’s Pop

Here are several plausible reasons why AMD is surging (or being bid aggressively) in the short term:

Catalyst news & deal flow

• AMD announced (or expanded) strategic deals — e.g. with OpenAI, or with Oracle for supplying GPUs — which can create re-rating momentum.

• Dealers and institutional flows may jump into AMD on positive headlines or growing visibility in the AI infrastructure race.

Valuation arbitrage / catch-up potential

• AMD’s valuation multiples are viewed by some as more attractive versus Nvidia’s (i.e. lower P/E, more upside if growth holds).

• Some institutional money may be rotating into AMD to play “underdog” or “value within high growth” themes.

Technical / sentiment rotation

• As Nvidia has run hard in prior periods, some capital may be rotating into names that haven’t rallied as much, or into second-tier names that can offer more leverage if they catch up.

Risk / uncertainty premium on Nvidia

• Nvidia’s dominance makes it more exposed to regulatory scrutiny, margin expectations, and execution risk in competitive areas.

• Any slight hiccups, or doubts about product cycles, could dampen appetite or inject caution.

Thus, AMD’s strength may be partly on its own fundamentals + deal momentum, and partly a function of rotational flows or market sentiment chasing what’s “fresh.”

Is Nvidia Losing Its Lead — Is the Rally Changing?

I think we should be cautious about claiming a permanent leadership shift just yet. Here’s a balanced view:

Why Nvidia Is Still A Key Bellwether

• Product & ecosystem strength: Nvidia still has the deeper entrenched software, libraries (CUDA), and data center footprint. Its roadmap and dominance in AI is tough to dislodge overnight.

• Margins & consistency: Nvidia tends to deliver more margin stability, and its brand in the AI chip space remains premium.

• Sentiment & expectations: Many longer-term tech and AI investors still view Nvidia as the safe “poster child” exposure.

So a short-term divergence or rotation doesn’t necessarily displace Nvidia’s leadership in the longer term.

But reasons to be alert

• If AMD continues to deliver real benchmarks / wins, some capital could permanently shift.

• If macro or regulatory headwinds bite — e.g. export controls, chip supply constraints, interest rate rises — momentum plays (which Nvidia often leads) may become more vulnerable.

• Market breadth weakening: If gains narrow into fewer names (e.g. only Nvidia or only AMD), that may be a sign of topping or fragility.

What Is More Likely: Shift or Short Rotation?

Our base view: What we are seeing now is rotation + re-rating speculation, not yet a durable shift. But this could evolve if AMD continues to validate its story (in performance, adoption, margins).

If we were positioning:

I would reduce conviction in absolute long-only exposure to Nvidia (i.e., don’t assume it’ll always catch every move).

I would consider adding select exposure to AMD / broader semi / compute names to capture upside if the divergence persists.

I would keep a close watch on:

• Quarterly results (especially performance metrics, margins, guidance)

• Any negative surprises from Nvidia (execution, regulatory issues)

• Market breadth, risk appetite, and whether other chip / hardware names follow AMD’s move (i.e. is this isolated or systemic)

In the next section we ran a 12-month scenario model comparing AMD vs. Nvidia (Bull / Base / Bear) and produced a tidy table + chart you can inspect.

What We Used As Inputs (and Why)

• Reference prices (market close Oct 15–16, 2025): AMD $238.60, NVDA $179.83. (news / price sources: Investing / Nasdaq / market outlets).

• Catalyst context: AMD’s Oct 15 surge (~+9.4%) driven by large customer deals (Oracle / others); Nvidia has both continued demand and occasional pullbacks tied to deal/news flow.

• Model approach (transparent / illustrative): project 12-month price = current price × (1 + assumed EPS growth) × (future forward-PE / assumed current forward-PE). We used working forward-PE assumptions (AMD 40×, NVDA 50×) — these are intentionally approximate because public forward-PE figures vary by source; treat these as model inputs you can change. (I noted multiple forward-PE estimates in the sources; these can be swapped into the table.)

Scenario Assumptions

Bull

• AMD: EPS +60%, forward PE → 50 (price ≈ $477, +100%)

• NVDA: EPS +45%, forward PE → 65 (price ≈ $339, +88.5%)

Base

• AMD: EPS +30%, PE stable 40 (price ≈ $310, +30%)

• NVDA: EPS +25%, PE stable 50 (price ≈ $225, +25%)

Bear

• AMD: EPS +5%, PE contracts to 30 (price ≈ $187.9, –21.2%)

• NVDA: EPS +2%, PE contracts to 40 (price ≈ $146.7, –18.4%)

Quick Takeaways

• Under bull AI adoption (big cloud orders + multiple expansion), AMD can outpace NVDA in % terms because it has more catch-up potential in the model — but both do very well. That reflects the market’s willingness to re-rate a successful underdog if it wins meaningful hyperscaler deals.

• In the base case both rise, with AMD slightly ahead (higher EPS growth assumed).

• In a bear or slowdown scenario, both fall; AMD’s larger assumed PE compression results in slightly worse downside — so AMD is higher beta in this setup.

• Key sensitivities: outcomes are very sensitive to (a) EPS delivery (real wins / deployments), and (b) forward PE re-rating/contraction — both are driven by news flow (big deals), broader AI demand, and macro/interest rates.

Next Steps

• Re-run the model with different PE / EPS inputs you prefer (e.g., use forward P/E figures you trust, or analyst EPS estimates).

• Convert this into a 3-scenario probability-weighted expected return (e.g., assign 30/50/20 weights).

• Add market-cap weighting, share count changes, or convert to expected upside to specific analyst targets (e.g., HSBC $320 NVDA target) and show implied probabilities.

In the next section, we present the probability-weighted 12-month expected return summary (using weights = 30 % Bull / 50 % Base / 20 % Bear):

Interpretation:

• With the assigned probabilities, AMD offers a slightly higher expected upside thanks to greater “catch-up” leverage in the bull and base cases.

• Nvidia’s path is steadier and less volatile; it still provides strong risk-adjusted potential but less convexity.

We went on to make an extended risk–reward comparison with implied 12-month price targets and efficiency metrics:

Interpretation

Expected price targets suggest:

• AMD → around $336 in 12 months.

• Nvidia → around $243.

Risk-adjusted Sharpe-like scores (return ÷ volatility) show:

• Nvidia offers a slightly more efficient risk–reward (1.01 vs 0.91).

• AMD delivers higher absolute upside but with greater volatility (i.e., higher beta exposure).

Takeaway

• If we want maximum convexity / catch-up potential, AMD still has the edge.

• If we prefer steadier, risk-efficient exposure, Nvidia remains the stronger core hold.

• A barbell blend (≈ 60 % NVDA / 40 % AMD) could balance both asymmetry and stability under current assumptions.

In the next section we continue to build the risk–return frontier for portfolios combining AMD and Nvidia:

The curve shows expected 12-month return (y-axis) versus annualized volatility (x-axis) for different portfolio weights (0 → 100 % AMD).

Left end (lower risk) → 100 % Nvidia: steadier returns, lower volatility.

Right end (higher risk) → 100 % AMD: higher expected upside but more volatility.

The middle of the curve (≈ 40–60 % AMD blend) offers the best risk-adjusted balance, achieving near-AMD upside with reduced risk through diversification.

Summary

The single day's stock performance does not indicate a lasting shift in the broader tech stock market, with Advanced Micro Devices' (AMD) recent gains driven by specific AI chip partnerships, rather than a fundamental overtaking of Nvidia's market dominance.

While AMD gained 9.40% on October 15, 2025, buoyed by major AI deals with Oracle and OpenAI, Nvidia only saw a marginal 0.11% decline. Analysts still project much stronger near-term growth for Nvidia, with greater control of the AI infrastructure market, but suggest AMD's recent partnerships could position it as a stronger long-term competitor. A single day's performance is not a reliable indicator for future market trends or the end of a long-term rally.

The rally in tech stocks isn't necessarily ending, but is evolving as investors become more discerning. The recent fluctuations, including Nvidia's marginal drop, are also influenced by broader market factors such as rekindled U.S.-China trade tensions and investor concerns about a market cool-off, not just company-specific news.

While Nvidia's short-term growth outlook remains more robust, AMD is gaining ground as a credible alternative in the AI chip market. This suggests a potentially more balanced market in the future, rather than a total shift away from Nvidia. Ultimately, the tech sector's overall trend appears positive, driven by strong tech earnings and AI investment, despite short-term volatility and specific company headwinds.

Appreciate if you could share your thoughts in the comment section whether you think we could take advantage with AMD possible rally and also benefit from Nvidia continued key bellwether.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire @MillionaireTiger appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.