AMD vs. Nvidia: Which Chip Giant Looks Stronger After Their Latest Acquisitions?

Advanced Micro Devices AMD) and Nvidia NVDA) continue to expand beyond AI chips as the semiconductor giants position themselves for the next phase of artificial intelligence.

Yesterday, AMD agreed to acquire AI research company World Labs for approximately $8.2 billion, while Nvidia recently announced a $12.93 billion deal for open-source AI platform Hugging Face. Both transactions remain subject to closing conditions.

Although both deals deepen their exposure to AI, AMD and Nvidia are taking noticeably different approaches.

Notably, AMD has been the much stronger performer in 2026, with shares soaring over 180% year to date compared with a 24% gain for NVDA.

AMD Adds World Labs’ AI Research Expertise

AMD’s all-stock acquisition of World Labs is expected to close by the end of 2026 and will bring renowned AI researcher Fei-Fei Li, often referred to as the “Godmother of AI”, to the company as executive vice president and chief scientist.

World Labs specializes in spatial-intelligence models capable of generating, reconstructing, and simulating interactive 3D environments from text, images, and video. Its expertise also extends into robotic learning and simulation, giving AMD greater exposure to emerging areas such as physical AI and robotics.

Strategically, the deal could help AMD better understand how next-generation AI workloads are evolving and use that insight to shape its future GPUs, CPUs, networking products, and software.

Nvidia Expands Its AI Ecosystem With Hugging Face

Nvidia’s planned acquisition of Hugging Face is much larger at nearly $13 billion, and is expected to close during the first half of 2027.

Hugging Face has become a central platform for open AI development, with more than 18 million developers, over 3 million models, 500,000 datasets, and 1 million applications on its platform. More than 200,000 companies also use Hugging Face to discover, customize, and deploy AI models.

Nvidia intends to keep the platform open, meaning developers will not be required to use Nvidia hardware. Still, owning such an influential AI-development ecosystem could deepen Nvidia’s relationships with developers while extending its reach well beyond GPUs and further strengthen its full-stack AI strategy.

AMD & Nvidia’s Growth Outlooks Remain Strong

AMD's underlying growth trajectory remains impressive. Second-quarter revenue surged 50% year over year to $11.5 billion, while Data Center sales more than doubled to $6.7 billion. Management expects roughly $13 billion in Q3 revenue, representing about 41% year-over-year growth at the midpoint.

The Zacks Consensus Estimate currently calls for AMD's fiscal 2026 sales to jump 46% to $50.5 billion, followed by another 65% increase to $83.17 billion in FY27. Earnings are projected to rise 79% this year and another 96% next year to $14.69 per share.

Nvidia's growth remains even more staggering given its significantly larger revenue base.

Fiscal Q2 revenue soared 106% to $96.2 billion, driven by a 117% increase in Data Center revenue to $89 billion. Nvidia is guiding for Q3 revenue of approximately $108 billion, reflecting 89% growth from the prior-year period.  

Furthermore, Zacks Consensus estimates call for Nvidia's current FY27 revenue to rise 88%, followed by another 65% increase in FY28 to a staggering $671.95 billion. EPS is projected to increase 94% in FY27 and another 66% in FY28 to $15.33.

NVDA Has the More Attractive Valuation

Perhaps the most surprising part of this comparison is valuation.

Despite Nvidia's larger AI footprint and tremendous growth, NVDA trades at a very reasonable 24X forward earnings multiple.

In comparison, AMD's tremendous rally has stretched its valuation, with shares trading over 90X forward earnings, well above the broader technology sector and S&P 500.

AMD could certainly grow into some of that premium if its Instinct accelerators, EPYC processors, and next-generation AI platforms gain further market share.

However, Nvidia currently combines faster near-term revenue growth and substantially higher profit margins with a much lower earnings multiple.

Conclusion & Strategic Thoughts

AMD's World Labs acquisition could strengthen its longer-term position in physical AI, robotics, and next-generation AI infrastructure, while Nvidia's Hugging Face deal further expands an already formidable ecosystem spanning chips, networking, software, and AI development.

Both companies have strong growth prospects, but their current valuations and earnings estimate trends differ considerably.

Correlating with this, Nvidia stock currently sports a Zacks Rank #1 (Strong Buy), supported by a more noticeable increase in EPS revisions, with AMD landing a Zacks Rank #3 (Hold).

For now, Nvidia's combination of explosive growth, AI infrastructure leadership, and a considerably cheaper forward earnings multiple gives NVDA a particularly compelling fundamental setup, while AMD's lofty valuation leaves less room for execution missteps following its massive YTD rally.

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This article originally published on Zacks Investment Research (zacks.com).

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