Nasdaq AMD

What you need to know… The S&P 500 Index ($SPX ) (SPY ) Friday closed down -1.22%, the Dow Jones Industrials Index ($DOWI ) (DIA ) closed down -0.83% and the Nasdaq 100 Index ($IUXX ) (QQQ ) closed down -1.75%. Stocks on Friday closed moderately lower, with the S&P...

U.S. stocks ended sharply lower on Friday as chipmakers dropped on concerns about weak consumer demand, while rising Treasury yields pressured Amazon and other megacap growth companies.

In this piece, I evaluated two chip stocks, Nvidia ( NASDAQ:NVDA ) and Advanced Micro Devices ( NASDAQ:AMD ), using TipRanks' comparison tool to determine which is better. Nvidia targets the gaming, professional visualization, data center, and automotive markets, while AMD focuses on the data center, embedded, gaming, and PC markets. Both chipmakers have tapped into the artificial intelligence (AI) craze by highlighting their AI-related capabilities. However, Nvidia has been much more successful, with its stock up more than 200% year-to-date and over the last 12 months. Meanwhile, AMD is up only 64% year-to-date, flipping its one-year return back into the green at 24%. With such a massive difference in their year-to-date rallies, it isn't surprising that NVIDIA is the one that's profitable. Due to AMD's lack of profitability, we'll compare their price-to-sales (P/S) ratios to gauge their valuations against each other and their industry. For comparison, the U.S. semiconductor industry is trading at a P/S multiple of 7, higher than its three-year average of 5.8. For the profitable Nvidia, we'll also compare its price-to-earnings (P/E) ratio to that of its industry. The semiconductor industry is trading at a P/E of 43.9, much higher than its three-year average P/E of 28.7. Nvidia (NASDAQ:NVDA) At a P/E of 109.1 and a P/S of 34.4, Nvidia looks grossly overvalued relative to its industry and to AMD. It's even pricy versus its five-year mean P/S of 19.3 and mean P/E of 76.4. However, despite this irrational exuberance, which would generally trigger a bearish view, a combination of factors suggests a neutral view might be appropriate. On the one hand, insiders have unloaded $146 million worth of Nvidia shares over the last three months, backing the bearish side of the argument. A closer look at the activity reveals many auto-sell transactions over the last week or two. These sales may be related to the insiders' preset trading plans, in which they set prices at which they will automatically sell their shares. However, there was also an Informative Sell transaction worth $25 million two weeks ago, just below $500 a share. Importantly, Nvidia's 52-week high is $502.66, so this transaction and the large number of auto-sell transactions suggest insiders may see the chipmaker's stock as unlikely to rise further from those levels. On the other hand, there have been a few developments involving Nvidia that suggest a more constructive view might be in order. First, the company's revenue more than doubled in the most recent quarter, but its cost of goods increased by only 7%, leaving some investors confused. However, a Bernstein analyst explained that Nvidia had taken a $1.34 billion charge, including $1.22 billion in inventory-related charges, that ran through the cost of goods sold in the same quarter a year ago. A closer look reveals that when those charges are excluded, Nvidia's cost of goods sold actually exploded, rising 70% between last year's second quarter and this year's second quarter. Still, the Bernstein analyst added that a surge of that magnitude was "entirely normal" based on the robust year-over-year growth in Data Center sales. In fact, Nvidia's total revenue rose 101% year-over-year to $13.5 billion, a new record, while its Data Center revenue rose 171% year-over-year to a new record of $10.3 billion. Both readings support a more constructive view. Then, there was a "conspiracy theory" that involved allegations around CoreWeave, a GPU cloud vendor that recently listed its Nvidia chips as collateral for a $2.3 billion financing. Given Nvidia's investments in CoreWeave, social media users suggested that CoreWeave's reported inventory of Nvidia chips was actually where Nvidia's data-center revenue beat came from. However, the Bernstein analyst noted that the timing of CoreWeave's August 3 release about the financing suggested that the Nvidia chips hadn't been deployed yet and thus were not recorded in the company's second-quarter revenues. What is the Price Target for NVDA Stock?   Nvidia has a Strong Buy consensus rating based on 40 Buys, one Hold, and zero Sell ratings assigned over the last three months. At $636.32, the average Nvidia stock price target implies upside potential of 45%. Advanced Micro Devices (NASDAQ:AMD) At a P/S of 7.8, AMD looks much more reasonably valued than Nvidia, especially considering that AMD's five-year mean P/S is 8. Importantly, AMD came up only a bit shy of profitability, with its net income margin at -0.1% over the last 12 months. Additionally, the company continues to generate robust growth, making a bullish view seem appropriate.   In its most recent earnings release, AMD said its AI engagements rose more than sevenfold. Meanwhile, the company is struggling with falling PC-related demand, which resulted in its first quarterly loss in years. However, AMD guided for double-digit-percentage sequential gains in Data Center and Client revenues for the third quarter. In fact, the company plans to launch its first accelerator designed for AI in the fourth quarter, suggesting the stock could have much more room to rise over the long term. Nvidia's supply chain is being pressured by the skyrocketing AI-related demand, presenting an opportunity for AMD. The company should also benefit from sales of the CPUs that data centers use for AI processing, something that Nvidia does not sell. While AMD is playing a bit of catch-up versus Nvidia on AI, the company's long-term track record of growth and upcoming products suggest it won't be lagging its chief competitor for long. Thus, at current valuations, AMD looks attractive as a long-term buy-and-hold option, albeit a risky one. What is the Price Target for AMD Stock?   Advanced Micro Devices has a Strong Buy consensus rating based on 22 Buys, seven Holds, and zero Sell ratings assigned over the last three months. At $140.25, the average Advanced Micro Devices stock price target implies upside potential of 38.2%. Conclusion: Neutral on NVDA, Long-Term Bullish on AMD While both companies have benefited from the irrational exuberance over AI, Nvidia is far ahead of AMD, with multiple market watchers estimating the former's market share of the AI data-center-chip market at 90%. Nevertheless, at some point, valuation becomes an issue, although in Nvidia's case, the triple-digit revenue growth in the recent quarter offsets some of that concern, resulting in a neutral view. Although AMD is the winner of this pairing, as more upside seems likely over the long term, Nvidia may also rise further. However, the irrational exuberance its valuation restrain my view on NVDA stock despite the robust revenue growth. Disclosure 

U.S. stocks ended sharply lower on Friday as chipmakers dropped on concerns about weak consumer demand, while rising Treasury yields pressured Amazon and other megacap growth companies.

In today's video, I discuss why numerous semiconductor stocks were down on Friday. Check out the short video to learn more, consider subscribing, and click the special offer link below.

Tech stocks were lower late Friday afternoon, with the Technology Select Sector SPDR Fund (XLK) decreasing 2% and the Philadelphia Semiconductor index down 3.1%.

Undoubtedly one of this week’s biggest developments, chip designer Arm Holdings ARM debuted on the Nasdaq on Thursday. Shares had a strong showing, soaring more than 20% in yesterday’s session, listed initially at $51 per share.

U.S. stocks tumbled on Friday as chipmakers dropped on concerns about weak consumer demand, while rising Treasury yields pressured Amazon and other megacap growth companies.

Tech stocks were lower Friday afternoon, with the Technology Select Sector SPDR Fund (XLK) decreasing 2.1% and the Philadelphia Semiconductor index down 3%.

Looking at options trading activity among components of the S&P 500 index, there is noteworthy activity today in Advanced Micro Devices Inc (Symbol: AMD), where a total volume of 500,665 contracts has been traded thus far today, a contract volume which is representative of

The Nasdaq fell more than 1% on Friday to lead declines in Wall Street's main indexes as chipmakers fell on concerns over consumer demand, while rising Treasury yields pressured major growth stocks.

Some analysts are concerned that Nvidia’s (NVDA ) massive stock repurchases could leave it short of cash for vital research and development (R&D). However, those concerns may be misguided as Nvidia’s free cash flow and spending on research and development both rose to records in Nvidia’s fiscal second quarter, and...

InvestorPlace - Stock Market News, Stock Advice & Trading Tips

What you need to know… The S&P 500 Index ($SPX ) (SPY ) today is down -0.93%, the Dow Jones Industrials Index ($DOWI ) (DIA ) is down -0.55%, and the Nasdaq 100 Index ($IUXX ) (QQQ ) is down -1.50%. Stock indexes this morning are moderately lower, with the...

Shareholders of Advanced Micro Devices (NASDAQ: AMD) are undoubtedly happy campers, with the stock up over 65% year-to-date. However, shareholders might be less content in the short term, with shares down almost 16% over the previous three months.  That may be about to change, t

Advanced Micro Devices (AMD) closed at $106.63 in the latest trading session, marking a -1% move from the prior day. This change lagged the S&P 500's daily gain of 0.84%. Meanwhile, the Dow gained 0.96%, and the Nasdaq, a tech

In today's video, I discuss various semiconductor stocks and recent updates. Check out the short video to learn more, consider subscribing, and click the special offer link below.

Investors often turn to recommendations made by Wall Street analysts before making a Buy, Sell, or Hold decision about a stock. While media reports about rating changes by these brokerage-firm employed (or sell-side) analysts ofte

Wall Street's main indexes were set to open higher on Thursday as hotter-than-expected economic data did not dent hopes of a pause in rate hikes in September, while investors awaited a highly anticipated Arm Holdings' stock market debut.

In today's video, I discuss Advanced Micro Devices (NASDAQ: AMD), its current and past data center CPU solutions, the current trend of the data center market, and its competitor Intel (NASDAQ: INTC). Check out the short video to learn more, consider subscribing, and click the spe