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Chips Retake Lead: What AMD and Nvidia Are Telling Us About AI
In the past week, Advanced Micro Devices and Nvidia both closed at all-time highs. That sounds like a single story.
It isn't.
Nvidia's record was its first since May — the end of a five-month stretch in which the company that defined the AI trade watched its own sector run past it. AMD's close capped a run in which the stock has risen nearly 200% year to date and crossed a $1 trillion market capitalization, becoming only the fourth U.S. chipmaker to do so.
Nvidia is up roughly 28% in 2026. Both stocks are at records. Understanding why those two paths converged this month tells you more about where the AI trade stands than either stock does alone.
AMD: The Orders Became Real
AMD's rally is not sentiment. It is backed by contracts.
The anchor is OpenAI, which committed to a six-gigawatt MI450 deployment and holds warrants for up to 160 million AMD shares tied to that rollout. Oracle followed with a commitment for 50,000 MI450 GPUs beginning in the third quarter. Those are the two orders that changed the conversation, because they established something the market had doubted for years: that a hyperscaler AI buildout can be architected around someone other than Nvidia.
The financials are catching up quickly. Second-quarter revenue hit a record $11.5 billion, with data center sales of $6.7 billion — 58% of the total and up more than 100% year over year. Diluted earnings rose roughly 82%. AMD (AMD - Free Report) also closed an $8.2 billion acquisition of World Labs, extending its reach further up the AI stack.
Nvidia: Capital Returns and a Laggard Catching Up
Nvidia's (NVDA - Free Report) catalyst was different in kind. In September, the board authorized an additional $150 billion for share repurchases — the largest single increase to a buyback program in corporate history, surpassing Apple's $110 billion authorization in 2024 — lifting remaining capacity to $235 billion through fiscal 2028. The increase alone exceeds the entire market value of about 84% of S&P 500 companies.
The timing matters. Management authorized that at a moment when Nvidia traded near its lowest earnings multiple in more than a decade. Buying back stock when your own multiple has compressed is the clearest signal a management team can send about perceived value.
And the supporting data helped. Foxconn, a critical assembler of Nvidia's server systems, posted its strongest month on record. And the company's second quarter was extraordinary on its own terms: revenue of $96.2 billion, up 106%, with Data Center revenue of $89.0 billion representing 92% of the business and gross margin holding at 75%.
The Q3 Setups
Both report within two weeks of each other, and the projections are instructive.
AMD, which sports a Zacks Rank #3 (Hold) at the moment, is set to report quarterly results on November 3rd. Management guided third-quarter revenue to approximately $13 billion, plus or minus $300 million — roughly 41% year-over-year growth and 13% sequential — with non-GAAP gross margin near 56%. Consensus sits at $1.90 per share on $13.06 billion, slightly above the guidance midpoint. Notably, that guidance came in above the prior Street consensus of $12.5 billion, which is the kind of detail that marks a genuine inflection rather than a beat-and-lower cycle.
Meanwhile, Nvidia garners a Zacks Rank #1 (Strong Buy) and reports in mid-November. Management guided third-quarter revenue to $108.0 billion, plus or minus 2%, and consensus has since converged near $2.47 per share on roughly $109.2 billion. Against a year-ago quarter of $1.30 per share, that implies earnings growth near 90%.
Two things stand out. First, the sequential step in Nvidia's revenue — roughly $11.8 billion added in a single quarter — is nearly as much as AMD's entire quarterly revenue base. Scale matters. Second, Nvidia's guidance assumes no Data Center revenue from China whatsoever, meaning any resumption is upside that no model currently carries.
Bottom Line
The most useful signal in this rally is which stock lagged. Nvidia spent most of 2026 as the underperformer while capital rotated into AMD, Intel, Arm and the memory names.
Its return to record territory on a buyback rather than a product announcement suggests the market is finally repricing the leader on earnings rather than narrative. And if AMD confirms that its data center momentum is durable and Nvidia guides the January quarter above consensus, the group likely has further to run.
View the Zacks #1 Rank List
Image: Bigstock
Chips Retake Lead: What AMD and Nvidia Are Telling Us About AI
In the past week, Advanced Micro Devices and Nvidia both closed at all-time highs. That sounds like a single story.
It isn't.
Nvidia's record was its first since May — the end of a five-month stretch in which the company that defined the AI trade watched its own sector run past it. AMD's close capped a run in which the stock has risen nearly 200% year to date and crossed a $1 trillion market capitalization, becoming only the fourth U.S. chipmaker to do so.
Nvidia is up roughly 28% in 2026. Both stocks are at records. Understanding why those two paths converged this month tells you more about where the AI trade stands than either stock does alone.
AMD: The Orders Became Real
AMD's rally is not sentiment. It is backed by contracts.
The anchor is OpenAI, which committed to a six-gigawatt MI450 deployment and holds warrants for up to 160 million AMD shares tied to that rollout. Oracle followed with a commitment for 50,000 MI450 GPUs beginning in the third quarter. Those are the two orders that changed the conversation, because they established something the market had doubted for years: that a hyperscaler AI buildout can be architected around someone other than Nvidia.
The financials are catching up quickly. Second-quarter revenue hit a record $11.5 billion, with data center sales of $6.7 billion — 58% of the total and up more than 100% year over year. Diluted earnings rose roughly 82%. AMD (AMD - Free Report) also closed an $8.2 billion acquisition of World Labs, extending its reach further up the AI stack.
Nvidia: Capital Returns and a Laggard Catching Up
Nvidia's (NVDA - Free Report) catalyst was different in kind. In September, the board authorized an additional $150 billion for share repurchases — the largest single increase to a buyback program in corporate history, surpassing Apple's $110 billion authorization in 2024 — lifting remaining capacity to $235 billion through fiscal 2028. The increase alone exceeds the entire market value of about 84% of S&P 500 companies.
The timing matters. Management authorized that at a moment when Nvidia traded near its lowest earnings multiple in more than a decade. Buying back stock when your own multiple has compressed is the clearest signal a management team can send about perceived value.
And the supporting data helped. Foxconn, a critical assembler of Nvidia's server systems, posted its strongest month on record. And the company's second quarter was extraordinary on its own terms: revenue of $96.2 billion, up 106%, with Data Center revenue of $89.0 billion representing 92% of the business and gross margin holding at 75%.
The Q3 Setups
Both report within two weeks of each other, and the projections are instructive.
AMD, which sports a Zacks Rank #3 (Hold) at the moment, is set to report quarterly results on November 3rd. Management guided third-quarter revenue to approximately $13 billion, plus or minus $300 million — roughly 41% year-over-year growth and 13% sequential — with non-GAAP gross margin near 56%. Consensus sits at $1.90 per share on $13.06 billion, slightly above the guidance midpoint. Notably, that guidance came in above the prior Street consensus of $12.5 billion, which is the kind of detail that marks a genuine inflection rather than a beat-and-lower cycle.
Meanwhile, Nvidia garners a Zacks Rank #1 (Strong Buy) and reports in mid-November. Management guided third-quarter revenue to $108.0 billion, plus or minus 2%, and consensus has since converged near $2.47 per share on roughly $109.2 billion. Against a year-ago quarter of $1.30 per share, that implies earnings growth near 90%.
Two things stand out. First, the sequential step in Nvidia's revenue — roughly $11.8 billion added in a single quarter — is nearly as much as AMD's entire quarterly revenue base. Scale matters. Second, Nvidia's guidance assumes no Data Center revenue from China whatsoever, meaning any resumption is upside that no model currently carries.
Bottom Line
The most useful signal in this rally is which stock lagged. Nvidia spent most of 2026 as the underperformer while capital rotated into AMD, Intel, Arm and the memory names.
Its return to record territory on a buyback rather than a product announcement suggests the market is finally repricing the leader on earnings rather than narrative. And if AMD confirms that its data center momentum is durable and Nvidia guides the January quarter above consensus, the group likely has further to run.