Artificial intelligence has created one of the biggest investment opportunities in years. As companies spend billions of dollars building AI data centers, two chipmakers are leading the race: Nvidia (NASDAQ:NVDA) and Advanced Micro Devices (NASDAQ:AMD).

Nvidia has been the clear leader for years, but AMD is starting to close the gap. The company has landed major customers, introduced new AI hardware, and continues to grow its server business at an impressive pace.

So, after AMD’s rally this year, should investors buy AMD instead of Nvidia? Or does Nvidia still offer the stronger long-term opportunity?

Let’s break it down.

Nvidia Still Sets the Standard in AI

Nvidia remains the biggest name in AI chips, and its financial results show why.

In the first quarter of fiscal 2027, the company reported $81.6 billion in revenue, an 85% increase from a year ago. Even more impressive, its Data Center business generated $75.2 billion, up 92% year over year, while adjusted earnings climbed 140% to $1.87 per share.

These numbers show that demand for Nvidia’s AI products is strong.

The company continues to benefit from rapid adoption of its Blackwell AI platform, solid networking demand, and investments from cloud providers, enterprises, and governments building AI infrastructure.

Nvidia is also much more than a GPU company today. Its CUDA software platform remains the industry’s favorite AI ecosystem, making it difficult for customers to move to another supplier. The company is also expanding into CPUs with its new Vera architecture, creating another long-term growth opportunity.

According to Bank of America, the global server CPU market could reach $170 billion by 2030, four times its current size. Nvidia wants Vera to become an important part of that future.

Financially, Nvidia remains in an excellent position. During the quarter, it generated $50.3 billion in operating cash flow and $48.6 billion in free cash flow. It also returned $19.3 billion to shareholders through stock buybacks while paying another $243 million in dividends.

However, Nvidia isn’t without challenges. Export restrictions to China remain a concern. Investors are also watching reports about possible delays in its Vera Rubin platform, increasing competition from rivals, and whether large technology companies will continue spending aggressively on AI infrastructure.

AMD Is Becoming a Serious AI Challenger

While Nvidia remains the market leader, AMD is building momentum.

The company reported first-quarter 2026 revenue of $10.3 billion, up 38% from last year. Its Data Center business reached a record $5.8 billion, increasing by 57%, while adjusted earnings increased 43% to $1.37 per share.

Much of that growth came from the high demand for AMD’s EPYC server processors and Instinct AI GPUs.

Also, AMD’s list of customers choosing its AI technology is growing

Microsoft announced that it will deploy AMD’s new Helios AI rack systems on Azure to power advanced AI models. The expanded partnership also includes new Azure virtual machines powered by AMD’s EPYC processors and additional networking technology across Microsoft’s cloud platform.

The firm joins an impressive customer list that already includes Meta, OpenAI, Oracle, and other AI companies.

AMD also expects shipments of its Helios systems, including deliveries to Microsoft, to begin during the second half of 2026.

CEO Lisa Su called Microsoft’s deployment “an important milestone” as AMD continues scaling its next-generation AI infrastructure.

AI Customer List Keeps Growing

Microsoft isn’t the only company betting on AMD. WSJ revealed that AMD has signed a multi-billion-dollar agreement with Anthropic to deploy its new MI455X GPUs and Helios rack-scale systems.

Following the announcement, Wells Fargo raised its price target on AMD to $615 while keeping an Overweight rating.

The bank said AMD’s data center GPU revenue could reach $40.6 billion by 2027, with some investors expecting it could even exceed $50 billion.

AMD has also secured major long-term commitments from Meta and OpenAI, which have both agreed to deploy up to 6 gigawatts of AMD AI infrastructure over time. Oracle is building a 50,000-GPU Helios supercluster, while Microsoft has become the first publicly announced customer for AMD’s Helios platform.

These wins suggest that AMD is no longer competing for small AI projects. It is now winning contracts from some of the biggest AI companies in the world.

AMD and Nvidia Are Taking Different Approaches

Nvidia and AMD are trying to solve AI computing in different ways. According to BofA, Nvidia said AI performance should be measured by how quickly each AI agent completes its task. 

That thinking is behind its new Vera CPU, which combines custom ARM-based processors with Rubin GPUs, networking, and storage into one tightly connected AI platform.

AMD sees things differently. The company shared that the future is about running more AI agents on each server at the same time. Its EPYC processors are designed to maximize throughput, allowing businesses to process more AI workloads across each rack.

Bank of America noted that AMD estimates its EPYC Turin processors deliver about 2.4 times Nvidia’s rack-level throughput in certain workloads, while the next-generation EPYC Venice chips could increase that advantage to 3.3 times.

Hidden Strength May Be Its CPU Business

Many investors focus only on AMD’s AI GPUs, but some analysts believe the company’s biggest opportunity could actually be its server CPUs.

AMD has steadily taken market share from Intel in recent years. During the latest quarter, its Data Center business generated $5.8 billion, surpassing Intel’s data center revenue.

The company doubled its estimate for the server CPU market, saying it could exceed $120 billion by 2030 as AI creates more demand for CPUs alongside GPUs.

Some analysts believe this part of AMD’s business is still undervalued because most investors remain focused on AI accelerators.

AMD is also generating better cash flows as the business grows. During the first quarter, it produced $3 billion in operating cash flow and $2.6 billion in free cash flow, while maintaining a healthy balance sheet with more cash than debt.

Which Stock Looks Better Today?

There is no doubt that AMD has become one of the biggest success stories in AI.

Its partnerships with Microsoft, Anthropic, Meta, OpenAI, and Oracle show that more companies want alternatives to Nvidia. AMD is expanding its AI ecosystem, its CPU business, and proving it can compete for some of the world’s largest AI contracts.

However, Nvidia still leads in important areas.

The company generates far more revenue, enjoys much higher profit margins, produces significantly more free cash flow, and continues to benefit from its powerful CUDA software ecosystem. Its complete AI platform, which includes GPUs, CPUs, networking, and software, also gives customers a reason to stay within Nvidia’s ecosystem.

Meanwhile, AMD’s 52-week high is about $584, gaining more than 150% this year, while Nvidia’s high is $212, rising only 11% in the year. The new rally pushed AMD’s forward price-to-earnings ratio above 70, compared with 23 for Nvidia.

Although AMD continues to grow rapidly, investors are already paying a premium for that future growth. Nvidia, meanwhile, is delivering faster revenue growth and stronger profitability.

AMD looks like the strongest challenger Nvidia has faced in years, and its list of AI customers suggests it could continue gaining market share.

Benzinga Disclaimer: This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.