Nvidia vs. AMD: Which Is the Better AI Chip Stock for 2026?

As we head into 2026, there are no signs that the boom in artificial intelligence (AI) infrastructure is slowing down. In fact, it only looks like it is ramping up.

The charge is being led by OpenAI, which has made aggressive commitments both to cloud computing companies and leading chipmakers. However, it's far from the only company racing to build out AI data centers. Demand at cloud computing providers has consistently outstripped capacity, which is leading to ever-increasing capital expenditure budgets.

Two of the companies at the forefront of the AI infrastructure build-out are graphics processing unit (GPU) chipmakers Nvidia (NASDAQ: NVDA) and Advanced Micro Devices (NASDAQ: AMD). While Nvidia is the clear leader in the space, AMD's stock has outperformed it so far in 2025 (at the time of this writing, AMD is up 80% year to date, while Nvidia is up 30%).

The question now is: Which stock will outperform the other in 2026?

The case for Nvidia

The biggest bull case for Nvidia to outperform in 2026 is that it's the market leader by a wide margin. The company has an over 90% share in the data center GPU space, in large part due to the system it has built around its chips. Most foundational AI code was built upon its CUDA software platform, giving it a wide moat, especially with regard to training large language models.

On top of that, the company also has a very strong data-center networking business, which enables it to offer end-to-end solutions it calls "AI factories." Its proprietary NVLink interconnect system lets its chips act as one unit within an AI cluster, while its Ethernet and InfiniBand solutions help transfer data quickly.

Nvidia's stock is also cheaper than AMD's from a forward price-to-earnings (P/E) basis, trading at 24 times next year's analyst estimates, compared to 34 times for AMD. It has also had the faster revenue growth, with sales increasing 62% last quarter, compared to 36% for AMD.

The case for AMD

AMD's data center revenue is a fraction of Nvidia's, so if it can take any share away from the market leader in the rapidly growing AI infrastructure space, the impact on its growth would be huge. Meanwhile, there are some reasons to believe it may be able to gain more traction in this market.

While it's difficult for AMD to compete with Nvidia in training, the company has carved out a niche in the inference market, where Nvidia's CUDA moat isn't quite as wide. This is important because the inference market is eventually expected to become larger than training, as it involves the actual application of the trained model in answering new questions it's given.

On top of that, there have been reports that large Nvidia customer Microsoft has built tool kits to convert CUDA code to Advanced Micro Devices' ROCm software platform to run more inference workloads on GPUs from the chipmaker.

AMD is also one of the chipmakers that OpenAI struck a partnership with as part of its aggressive AI data center build-out. What is unique about this deal is that OpenAI will take up to a 10% stake in AMD, which will supply OpenAI with up to six gigawatts of its GPUs -- what could be valued upward of $200 billion.

Meanwhile, OpenAI will receive warrants for up to 160 million shares of AMD. The deal will be a huge revenue boost for AMD in the coming years and should help it compete more effectively with Nvidia in the GPU market.

For its part, AMD laid out some robust long-term targets at its November analyst day. It's looking to increase its revenue at a more than 35% compound annual rate over the next three to five years, with more than 60% data center growth.

At the same time, it's looking to take a more than 50% market share in data central processing units, where it is already the market leader, and it sees its AI revenue rising by more than 80%.

Image source: Getty Images

The verdict

While I think both stocks will do well in 2026, I give the edge to AMD to outperform once again next year. It doesn't take as much to move the needle for the company, and its OpenAI partnership and news coming out of Microsoft could be a good setup for it to exceed expectations in 2026.

Geoffrey Seiler has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.