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NVDA vs. AMAT: Which Semiconductor Stock is a Better Buy Now?
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Key Takeaways
NVIDIA's Data Center revenues hit $62.31B in Q4 FY26, 91.5% of sales, surging 75% year over year.
Applied Materials gains from AI-driven WFE demand, with DRAM rising to 34% of segment revenues.
AMAT faces export risks and margin pressure, while NVIDIA shows strong earnings and valuation.
NVIDIA Corporation (NVDA - Free Report) and Applied Materials, Inc. (AMAT - Free Report) stand out as major beneficiaries of the AI-driven semiconductor upcycle. While NVIDIA dominates the AI chip design market, powering data centers, cloud platforms and next-generation AI applications, Applied Materials sits at the heart of chip manufacturing, supplying critical equipment used by foundries to produce advanced semiconductors.
Given the major tailwind, let’s analyze their business models, risk profiles and long-term outlooks and examine which one looks like the better investment right now.
The Case for AMAT Stock
AMAT, being the leading manufacturer of wafer fabrication equipment products, is benefiting from the huge demand as companies worldwide are investing heavily in AI. AMAT has a massive upside from AI-driven capex as memory makers like Samsung Electronics, SK Hynix and Micron Technology are driving the demand for WFE products, and complex processes are helping AMAT to charge a premium.
Another tailwind is the shift of memory production toward high-margin AI applications, including HBM and DDR5. AMAT’s three most critical growth pillars are DRAM, logic and advanced packaging, all driven by AI. DRAM has grown to contribute 34% to AMAT’s Semiconductor Systems revenues, rising from the massive equipment intensity, which has made its DRAM business the fastest-growing business in 2025.
AMAT is also experiencing an inflection in 4F2 with 6F2 as the future of DRAM technology. The transitions to advanced nodes such as 6F2 and future 3D DRAM architectures are increasing process complexity and demand for deposition, etch and inspection tools, paving the way for AMAT’s most advanced wafer fabrication equipment. Rising process complexity also signals future growth in hybrid bonding and 3D chiplet stacking.
Applied Materials deepened its partnership with SK hynix and Micron Technology for R&D to accelerate next-generation memory innovation, particularly in DRAM and HBM for AI applications. Broad portfolio and diversified offerings like deposition, materials engineering, etch, metrology and packaging are additional tailwinds. However, the company faces some challenges too.
A major headwind for Applied Materials is increasing U.S.-China tensions and export restrictions on semiconductor manufacturing equipment. Global supply chain disruptions emerging from the war pose a threat to the company. Rising competition from established players is causing AMAT to shrink its margins to provide a better value. The Zacks Consensus Estimates for ASML’s 2026 earnings have been revised downward in the past 30 days.
Image Source: Zacks Investment Research
The Case for NVDA Stock
NVIDIA’s most powerful growth engine continues to be its Data Center business. In the fourth quarter of fiscal 2026, the segment generated $62.31 billion in revenues, representing 91.5% of total sales. This marked a staggering 75% year-over-year increase and 22% sequential growth. With AI adoption accelerating across industries, NVIDIA's stronghold in data centers makes it a critical beneficiary of this trend.
The robust performance was mainly driven by higher shipments of the Blackwell GPU computing platforms that are used for the training and inference of large language models, recommendation engines and generative AI applications. The demand for NVIDIA’s Blackwell GPU computing platforms has been a key catalyst as cloud providers and enterprises scale their AI infrastructure.
Large cloud service providers contributed to the majority of Data Center revenues, indicating continued hyperscale investment in AI-driven computing. NVIDIA’s leadership in AI chip development positions it well for sustained revenue growth in this segment. NVIDIA’s foray into the autonomous vehicles and other automotive electronics space is positive and diversified, making it resilient.
The diversification has also provided NVDA a relief despite ongoing macroeconomic challenges, geopolitical issues and trade and tariff wars, NVIDIA’s financials remain rock solid. In the fourth quarter of fiscal 2026, revenues jumped 73% from the year-ago quarter, while non-GAAP earnings per share rose 82%. The Zacks Consensus Estimate for NVDA’s fiscal 2027 earnings suggest 67% year-over-year growth. The estimate has been revised downward by a penny in the past 30 days.
Image Source: Zacks Investment Research
NVDA vs. AMAT: Price Performance & Valuation Check
NVIDIA shares have risen 6.7% year to date, while Applied Materials has soared 53.5%.
YTD Performance Chart
Image Source: Zacks Investment Research
On the valuation front, Applied Materials trades at a forward 12-month price-to-earnings (P/E) multiple of 31.69, above its median of 23.42. NVIDIA trades at a PE multiple of 24.12, below its median of 31.69.
Forward 12 Month (P/S) Valuation Chart
Image Source: Zacks Investment Research
Conclusion: NVDA is a Better Investment Bet Than AMAT
While both Applied Materials and NVIDIA are clear beneficiaries of the AI-driven semiconductor upcycle, NVIDIA stands out as the stronger investment at this stage of the cycle. Applied Materials is indirectly tied to AI through semiconductor capital expenditure, which is inherently cyclical and exposed to geopolitical risks, particularly U.S.-China tensions and export restrictions, while NVDA sits at the center of AI creation. NVDA’s valuation suggests it is the right time to buy the stock.
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NVDA vs. AMAT: Which Semiconductor Stock is a Better Buy Now?
Key Takeaways
NVIDIA Corporation (NVDA - Free Report) and Applied Materials, Inc. (AMAT - Free Report) stand out as major beneficiaries of the AI-driven semiconductor upcycle. While NVIDIA dominates the AI chip design market, powering data centers, cloud platforms and next-generation AI applications, Applied Materials sits at the heart of chip manufacturing, supplying critical equipment used by foundries to produce advanced semiconductors.
Given the major tailwind, let’s analyze their business models, risk profiles and long-term outlooks and examine which one looks like the better investment right now.
The Case for AMAT Stock
AMAT, being the leading manufacturer of wafer fabrication equipment products, is benefiting from the huge demand as companies worldwide are investing heavily in AI. AMAT has a massive upside from AI-driven capex as memory makers like Samsung Electronics, SK Hynix and Micron Technology are driving the demand for WFE products, and complex processes are helping AMAT to charge a premium.
Another tailwind is the shift of memory production toward high-margin AI applications, including HBM and DDR5. AMAT’s three most critical growth pillars are DRAM, logic and advanced packaging, all driven by AI. DRAM has grown to contribute 34% to AMAT’s Semiconductor Systems revenues, rising from the massive equipment intensity, which has made its DRAM business the fastest-growing business in 2025.
AMAT is also experiencing an inflection in 4F2 with 6F2 as the future of DRAM technology. The transitions to advanced nodes such as 6F2 and future 3D DRAM architectures are increasing process complexity and demand for deposition, etch and inspection tools, paving the way for AMAT’s most advanced wafer fabrication equipment. Rising process complexity also signals future growth in hybrid bonding and 3D chiplet stacking.
Applied Materials deepened its partnership with SK hynix and Micron Technology for R&D to accelerate next-generation memory innovation, particularly in DRAM and HBM for AI applications. Broad portfolio and diversified offerings like deposition, materials engineering, etch, metrology and packaging are additional tailwinds. However, the company faces some challenges too.
A major headwind for Applied Materials is increasing U.S.-China tensions and export restrictions on semiconductor manufacturing equipment. Global supply chain disruptions emerging from the war pose a threat to the company. Rising competition from established players is causing AMAT to shrink its margins to provide a better value. The Zacks Consensus Estimates for ASML’s 2026 earnings have been revised downward in the past 30 days.
Image Source: Zacks Investment Research
The Case for NVDA Stock
NVIDIA’s most powerful growth engine continues to be its Data Center business. In the fourth quarter of fiscal 2026, the segment generated $62.31 billion in revenues, representing 91.5% of total sales. This marked a staggering 75% year-over-year increase and 22% sequential growth. With AI adoption accelerating across industries, NVIDIA's stronghold in data centers makes it a critical beneficiary of this trend.
The robust performance was mainly driven by higher shipments of the Blackwell GPU computing platforms that are used for the training and inference of large language models, recommendation engines and generative AI applications. The demand for NVIDIA’s Blackwell GPU computing platforms has been a key catalyst as cloud providers and enterprises scale their AI infrastructure.
Large cloud service providers contributed to the majority of Data Center revenues, indicating continued hyperscale investment in AI-driven computing. NVIDIA’s leadership in AI chip development positions it well for sustained revenue growth in this segment. NVIDIA’s foray into the autonomous vehicles and other automotive electronics space is positive and diversified, making it resilient.
The diversification has also provided NVDA a relief despite ongoing macroeconomic challenges, geopolitical issues and trade and tariff wars, NVIDIA’s financials remain rock solid. In the fourth quarter of fiscal 2026, revenues jumped 73% from the year-ago quarter, while non-GAAP earnings per share rose 82%. The Zacks Consensus Estimate for NVDA’s fiscal 2027 earnings suggest 67% year-over-year growth. The estimate has been revised downward by a penny in the past 30 days.
Image Source: Zacks Investment Research
NVDA vs. AMAT: Price Performance & Valuation Check
NVIDIA shares have risen 6.7% year to date, while Applied Materials has soared 53.5%.
YTD Performance Chart
Image Source: Zacks Investment Research
On the valuation front, Applied Materials trades at a forward 12-month price-to-earnings (P/E) multiple of 31.69, above its median of 23.42. NVIDIA trades at a PE multiple of 24.12, below its median of 31.69.
Forward 12 Month (P/S) Valuation Chart
Image Source: Zacks Investment Research
Conclusion: NVDA is a Better Investment Bet Than AMAT
While both Applied Materials and NVIDIA are clear beneficiaries of the AI-driven semiconductor upcycle, NVIDIA stands out as the stronger investment at this stage of the cycle. Applied Materials is indirectly tied to AI through semiconductor capital expenditure, which is inherently cyclical and exposed to geopolitical risks, particularly U.S.-China tensions and export restrictions, while NVDA sits at the center of AI creation. NVDA’s valuation suggests it is the right time to buy the stock.
NVDA sports a Zacks Rank #1 (Strong Buy), while AMAT carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.