Artificial intelligence (AI) is advancing at a pace that defies all expectations, propelling the stock market to valuation levels not seen in decades. The key driver behind the breakthroughs? State-of-the-art chips.
While a growing number of companies are exploring the new technology, the truth is that only a few of them have proved to be truly indispensable to the sector with their semiconductor solutions. Among them are Nvidia (NASDAQ: NVDA) and AMD (NASDAQ: AMD).
As the World Semiconductor Trade Statistics (WSTS) projects the chip sector to grow 8.5% and reach $760.7 billion in 2026, the two companies present strong investment opportunities, at least in theory. But which one is more likely to deliver?
Nvidia stock outlook
Nvidia is still the undisputed leader in graphics processing units (GPUs). In fiscal Q2 2026, the company posted record sales of $46.7 billion, up 56% year-over-year. More impressively, Nvidia controls over 90% of the data center market, according to IoT Analytics.
During a recent earnings call, CEO Jensen Huang projected that global data center spending could reach $3–$4 trillion by 2030. If that happens, and if Nvidia can achieve 55% to 60% share of the relevant AI market, New Street Research analyst Pierre Ferragu suggests the company could see between $1–1.2 trillion in data-center revenue by the end of the decade.
The $4-trillion chip giant is also set to gain from developments in agentic, personalized, and edge AI. A potential breakthrough in artificial general intelligence (AGI) could prove especially profitable, given that such systems would likely depend heavily on advanced GPUs for both development and large-scale deployment.
Accordingly, Wall Street remains highly optimistic. With 35 “Buy” ratings, three “Holds”, and just one “Sell,” the average 12-month price target for the stock is $210.08 at the time of writing, a 23.03% upside from current levels, according to TipRanks.
AMD stock outlook
AMD had a bad start this month, its shares sliding 6% on Friday, September 5, after Broadcom (NASDAQ: AVGO) posted strong quarterly results and announced a $10 billion deal with an industry client that many speculate to be OpenAI.
The development underscores a potential turning point not only for AMD but also for the broader AI hardware market. Namely, while GPUs have so far been the foundation of generative AI, application-specific chips (ASICs) designed for targeted workloads could emerge as profitable alternatives.
That leaves AMD between a rock and a hard place, competing with Nvidia for a GPU market share and trying to remain innovative if it is to compete with emerging ASIC developers.
Reflecting this pressure, HSBC trimmed its AMD price target from $200 to $185 on September 9. Wall Street’s 12-month average target now stands at $184.74, with estimates ranging from $120 to $230, according to TipRanks.
Even so, HSBC noted that markets may underestimate the pricing power of AMD. The firm expects cloud players such as Meta (NASDAQ: META) and Elon Musk’s xAI to begin testing AMD’s new MI400 rack solution. What’s more, the company has also struck a partnership with IBM (NYSE: IBM) to combine its accelerators with IBM’s quantum systems in next-generation supercomputing.
Nonetheless, despite the bank’s somewhat optimistic comments, AMD is still far behind Nvidia. For instance, AMD’s data center revenue rose to $3.2 billion year-over-year in Q2 2025, while Nvidia posted no less than $41.1 billion in the same period.
Overall, Wall Street is more bullish on Nvidia as the more likely candidate to remain dominant in 2026, although AMD does have a lot of potential as well.
Featured image via Shutterstock
