The recent market turmoil has left investors wondering which better AI stock to buy now deserves their capital. A Democratic sweep in the U.S. midterm elections sparked fears of tighter data center regulations and doubts about the returns on massive AI spending. The Nasdaq fell 5.5% on Nov. 5, its worst single-day drop since April 2025. Nvidia and AMD were hit hard, tumbling 9.3% and 17.3%, respectively. Yet both chipmakers remain central to the long-term AI buildout, so the dip may offer an opening—if you pick the right one.
Nvidia’s momentum shows no sign of slowing
Nvidia’s revenue growth remains extraordinary. Management expects fiscal third-quarter 2027 revenue of $108 billion, plus or minus 2%, according to an Aug. 26 press release. That would top the $96 billion recorded in fiscal Q2 2027, which itself rose 106% year over year and 18% sequentially. The data center segment did the heavy lifting, with revenue climbing 117% to $89 billion. Nvidia’s Vera Rubin platform is now in full production, positioning the company to capture rising demand for AI infrastructure. Profitability is also improving: gross margin expanded to 75% in fiscal Q2, up from 72.4% a year earlier, and net income and GAAP operating income both showed steady gains.
AMD’s data center surge comes with a caveat
AMD is no slouch either. Fiscal third-quarter 2026 revenue reached $13.38 billion, up 45% year over year and 16% sequentially, per a Nov. 3 press release. Data center revenue jumped 97% to a record $8.5 billion, driven by demand for Instinct GPUs, EPYC CPUs, and rack-scale AI systems. GAAP operating income surged 123% year over year, and non-GAAP earnings per share rose 74% to $2.09. The fourth-quarter outlook calls for revenue of $17 billion, plus or minus 3%, representing 66% year-over-year growth and roughly 27% sequential growth. However, AMD’s projected non-GAAP margin for fiscal Q4 is slightly below the third quarter’s level, and the gaming business is showing weakness—signs that margin pressure could be looming.
Profitability and efficiency tip the scales
Both companies delivered strong results and upbeat guidance, but their profitability profiles diverge. Nvidia’s future profitability looks robust, while AMD may face headwinds. More tellingly, Nvidia generates far more profit from shareholders’ equity: its return on equity (ROE) stands at 96%, compared with AMD’s 16.8%. That efficiency gap is a key reason Nvidia appears to be the better buy-the-dip opportunity. Analysts seem to agree—Nvidia carries a Zacks Rank #2 (Buy), while AMD holds a Zacks Rank #3 (Hold).
For investors weighing the two AI leaders after the sell-off, Nvidia’s superior profitability and significantly higher ROE make it the more compelling choice. AMD’s data center momentum is impressive, but margin concerns and weaker efficiency keep it a step behind.
