NVIDIA Corporation

🇺🇸NASDAQ Global Select
Back to all articles
NVIDIA Corporation stock analysis NVDA overview
Bullish +75

Forget Nvidia: Sudden CPU Shortage Can Make AMD Explode Higher

📈 Nvidia reported Q4 revenue of $68.13 billion, representing a 73.2% year-over-year increase, driven by strong GPU performance and Jensen Huang's AI announcements.

⚠️ The Nvidia trade is considered crowded with a $5 trillion market cap and faces headwinds from China export controls, which incurred a $4.5 billion charge in Q1 FY2026.

🏥 A CPU shortage is reshaping data center economics, creating an opportunity for Advanced Micro Devices (AMD) that the market has not yet fully priced in.

💾 Morgan Stanley predicts agentic AI will drive chip spending beyond GPUs to CPUs and memory, potentially adding $32.5-60 billion to the data-center CPU market by 2030.

📉 AMD is gaining CPU market share as Intel struggles with supply constraints, confirmed by major hyperscalers like AWS, Oracle, Google Cloud, and Microsoft deploying EPYC processors.

💰 AMD delivered Q4 2025 EPS of $1.53, beating estimates of $1.32, while revenue reached $10.27 billion, a 34.1% year-over-year increase.

📈 Data Center revenue for AMD hit a record $5.38 billion in Q4 2025, up 39%, contributing to full-year free cash flow that surged 129.48% to $5.52 billion.

📉 The stock sentiment is bullish with AMD shares up 65% over the past month and 49% year-to-date compared to Nvidia's more neutral prediction market score of 53.5.

⚖️ Valuation differences exist with AMD trading at a forward P/E of 52 versus Nvidia's 25, though management believes AMD's growth trajectory justifies the premium.

📝 Analysts suggest that while Nvidia dominates GPUs and has strong momentum, the CPU shortage narrative provides a defensive alternative position for investors.

💡 CEO Lisa Su stated the company is entering 2026 with strong momentum led by high-performance EPYC CPUs and rapid scaling of its data center AI franchise.

Bullish Signals
  • AMD is capturing CPU market share as a shortage reshapes data center economics, with major hyperscalers like AWS, Oracle, Google Cloud, and Microsoft Azure all deploying AMD's EPYC processors.
  • AMD delivered Q4 2025 EPS of $1.53 versus estimates of $1.32, beating expectations by 15.91%, while revenue surged to $10.27 billion, up 34.1% year-over-year.
  • Data Center revenue reached a record high of $5.38 billion, representing a 39% increase, and free cash flow accelerated dramatically by 129.48% to $5.52 billion for the full year.
  • Morgan Stanley predicts agentic AI could expand chip spending beyond GPUs to include CPUs and memory, potentially adding $32.5-60 billion to the data-center CPU market by 2030, positioning AMD well for this shift.
  • AMD stock has gained significant momentum with the share price up 65% over the past month and 49% year-to-date, reflecting bullish market sentiment ahead of full pricing in the CPU shortage catalyst.
  • Lisa Su stated the company is entering 2026 with strong momentum across its business, driven by accelerating adoption of high-performance EPYC CPUs and rapid scaling of its data center AI franchise.
Risk Factors
  • Nvidia (NVDA) is trading at a $5 trillion market capitalization, which represents a crowded trade where the good news may already be fully priced into the stock.
  • China exposure remains a significant downside risk with a reported $4.5 billion charge in Q1 FY2026 from export controls and explicit exclusion of Data Center compute revenue from China in guidance.
  • Manufacturing bottlenecks are acknowledged by Jensen Huang as a '2-3 year problem,' creating potential supply constraint headwinds that could impede growth over the next several years.
  • Gaming supply constraints are flagged as a specific headwind for Nvidia starting in Q1 FY2027 and beyond, threatening revenue diversification.
  • Prediction market sentiment for Nvidia sits at a composite score of 53.5, which is considered neutral, suggesting that investors may have already overreacted to recent gains.
  • Nvidia's stock is up 106.3% over the past year and 7.18% year-to-date, indicating limited room for further upside given the crowded trade dynamics.
  • Nvidia commands a forward P/E of 25 versus AMD's 52 (or 32 on 2027 earnings), which leaves Nvidia with less margin for error relative to its competitor.
  • The article highlights that AI infrastructure spending is shifting toward CPUs and memory, potentially diluting the long-term dominance of GPUs as a primary growth driver.
Full Analysis
The article argues that while Nvidia (NVDA) continues to dominate with a fourth-quarter revenue of $68.13 billion, representing a 73.2% year-over-year increase, the investment landscape is becoming crowded. Jensen Huang's declaration of an "agentic AI inflection point" reinforces this momentum, yet Nvidia now trades at a valuation of approximately $5 trillion, which the text describes as nearly ten times the size of AMD. The article highlights several headwinds for Nvidia, including significant exposure to China—evidenced by a $4.5 billion charge taken in Q1 FY2026 related to export controls—and acknowledged manufacturing bottlenecks that Huang described as a multi-year challenge. Consequently, the sentiment prediction market score sits at 53.5, suggesting the crowd has already priced in much of Nvidia's potential upside. In contrast, the piece posits that Advanced Micro Devices (AMD) is positioned to benefit from a CPU shortage reshaping data center economics. Morgan Stanley recently predicted that agentic AI will drive chip spending beyond graphics processors to include CPUs and memory, potentially expanding the data-center CPU market by $32.5 to $60 billion by 2030. AMD's EPYC server processors are central to this shift as Intel faces supply constraints. Major hyperscalers including AWS, Oracle, Google Cloud, and Microsoft Azure are actively deploying and expanding their use of 5th Gen EPYC processors, with AWS launching new instances specifically on these chips. Financially, the article points to strong performance from AMD in recent quarters. In Q4 2025, AMD reported earnings per share (EPS) of $1.53, exceeding estimates of $1.32, alongside revenue growth of 34.1% year-over-year to reach $10.27 billion. Notably, data center revenue hit a record $5.38 billion, while free cash flow surged 129.48% year-over-year to $5.52 billion for the full year. CEO Lisa Su emphasized strong momentum driven by high-performance EPYC and Ryzen CPUs. The stock price has responded positively with gains of 65% over the past month and 49% year-to-date, trading at a forward P/E of 52 compared to Nvidia's 25, though the analysis suggests this premium is defensible given AMD's accelerating growth trajectory and the unpriced tailwind of the CPU shortage.