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Should You Buy AMD Post-World Labs Deal or Still Favor NVIDIA ETFs?
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Key Takeaways
World Labs strengthens AMD's long-term position in physical AI and spatial computing.
NVIDIA retains a strong edge through its CUDA ecosystem and AI infrastructure.
AMD's higher valuation makes NVIDIA more compelling based on current analyst targets.
Advanced Micro Devices (AMD - Free Report) is acquiring Fei-Fei Li’s World Labs for about $8.2 billion in an all-stock deal. The acquisition is expected to close by the end of 2026. World Labs specializes in spatial intelligence, 3D-world simulation and physical AI. Fei-Fei Li will become AMD’s executive vice president and chief scientist.
The bigger significance is that AMD isn't simply trying to sell another GPU. It is getting closer to the AI model-development layer, which can help AMD understand where future workloads are heading and design its hardware and software around them.
That could become particularly valuable if the next major AI cycle shifts from today's chatbot/data-center workloads toward reasoning, robotics, autonomous machines and physical-world simulation. AMD itself says World Labs' research will help guide its hardware, software and systems roadmaps to power the next generation of the AI ecosystem.
Founded in 2024, World Labs is led by Dr. Fei-Fei Li, who was once the chief scientist at Google (GOOGL - Free Report) Cloud. World Labs raised $1 billion in a funding round earlier this year that included an investment from AMD, per Reuters.
Should You Favor AMD Over AI Chip King NVIDIA?
While the latest news of the World Labs deal is a great positive for AMD, it might pay off for AMD over the long run. For today, the valuation gap between AMD and NVIDIA (NVDA - Free Report) is substantial.
As of late September, AMD had just crossed $1 trillion in market capitalization after an enormous 2026 rally, while NVIDIA was around $5.45 trillion. AMD currently trades at roughly 55.6x forward earnings versus about 18.7x for NVIDIA, according to data cited by Yahoo Finance.
In short, NVIDIA's forward P/E substantially below AMD's while NVIDIA was showing stronger growth, profitability and cash generation. AMD’s upcoming quarter’s expected earnings growth is 58.33% and revenue growth is 41.3% while NVIDIA’s expected earnings and revenue growth are 90% and 91.24%, respectively.
NVIDIA has a dominant position in the AI accelerator market with its CUDA software moat, while AMD has emerged as a very strong player in the field. AMD’s open-source software stack, ROCm, offers hardware flexibility and lower costs.
Stock Performance & Buyback News
NVDA is up only 21.2% this year versus AMD’s 172% gains. Most good news appears to be priced in AMD’s valuation. The World Labs acquisition potentially makes AMD an attractive long-term growth story.
For a new investment today, investors can still choose NVDA rather than chasing AMD at its current valuation. NVIDIA also announced a record $150 billion increase in its stock-repurchase authorization, taking its total buyback capacity to $235 billion through 2028. The move comes as NVIDIA continues to generate enormous amounts of cash from the AI boom.
The company has already been aggressively returning capital to its shareholders. NVIDIA repurchased roughly $34 billion of stock in fiscal 2025 and more than $40.4 billion in fiscal 2026. During the first half of fiscal 2027, through July 2026, it bought back another $39 billion, per Yahoo Finance. In comparison, AMD’s stock buyback authorization is much smaller in size.
Analyst Price Targets Point to More Upside for NVIDIA
NVIDIA’s average price target from 48 analysts is $327.71, implying 45.6% upside from its Sept. 25 close of $225.07. The forecasts range from a low of $180.00 to a high of $515.00. NVDA has a Zacks Rank #1 (Strong Buy).
AMD’s average target from 42 analysts is $627.38, implying 0.52% downside from $630.63, recorded on September 25. AMD has a Zacks Rank #3 (Hold).
Semiconductor & AI ETFs in Focus
While NVDA looks to be a better bet currently, investors can access both stocks through a basket approach.iShares Semiconductor ETF (SOXX - Free Report) , VanEck Fabless Semiconductor ETF (SMHX - Free Report) , and Invesco AI and Next Gen Software ETF (IGPT - Free Report) hold both stocks in substantial weights.
View the Zacks #1 Rank List
Image: Bigstock
Should You Buy AMD Post-World Labs Deal or Still Favor NVIDIA ETFs?
Key Takeaways
Advanced Micro Devices (AMD - Free Report) is acquiring Fei-Fei Li’s World Labs for about $8.2 billion in an all-stock deal. The acquisition is expected to close by the end of 2026. World Labs specializes in spatial intelligence, 3D-world simulation and physical AI. Fei-Fei Li will become AMD’s executive vice president and chief scientist.
The bigger significance is that AMD isn't simply trying to sell another GPU. It is getting closer to the AI model-development layer, which can help AMD understand where future workloads are heading and design its hardware and software around them.
That could become particularly valuable if the next major AI cycle shifts from today's chatbot/data-center workloads toward reasoning, robotics, autonomous machines and physical-world simulation. AMD itself says World Labs' research will help guide its hardware, software and systems roadmaps to power the next generation of the AI ecosystem.
Founded in 2024, World Labs is led by Dr. Fei-Fei Li, who was once the chief scientist at Google (GOOGL - Free Report) Cloud. World Labs raised $1 billion in a funding round earlier this year that included an investment from AMD, per Reuters.
Should You Favor AMD Over AI Chip King NVIDIA?
While the latest news of the World Labs deal is a great positive for AMD, it might pay off for AMD over the long run. For today, the valuation gap between AMD and NVIDIA (NVDA - Free Report) is substantial.
As of late September, AMD had just crossed $1 trillion in market capitalization after an enormous 2026 rally, while NVIDIA was around $5.45 trillion. AMD currently trades at roughly 55.6x forward earnings versus about 18.7x for NVIDIA, according to data cited by Yahoo Finance.
In short, NVIDIA's forward P/E substantially below AMD's while NVIDIA was showing stronger growth, profitability and cash generation. AMD’s upcoming quarter’s expected earnings growth is 58.33% and revenue growth is 41.3% while NVIDIA’s expected earnings and revenue growth are 90% and 91.24%, respectively.
NVIDIA has a dominant position in the AI accelerator market with its CUDA software moat, while AMD has emerged as a very strong player in the field. AMD’s open-source software stack, ROCm, offers hardware flexibility and lower costs.
Stock Performance & Buyback News
NVDA is up only 21.2% this year versus AMD’s 172% gains. Most good news appears to be priced in AMD’s valuation. The World Labs acquisition potentially makes AMD an attractive long-term growth story.
For a new investment today, investors can still choose NVDA rather than chasing AMD at its current valuation. NVIDIA also announced a record $150 billion increase in its stock-repurchase authorization, taking its total buyback capacity to $235 billion through 2028. The move comes as NVIDIA continues to generate enormous amounts of cash from the AI boom.
The company has already been aggressively returning capital to its shareholders. NVIDIA repurchased roughly $34 billion of stock in fiscal 2025 and more than $40.4 billion in fiscal 2026. During the first half of fiscal 2027, through July 2026, it bought back another $39 billion, per Yahoo Finance. In comparison, AMD’s stock buyback authorization is much smaller in size.
Analyst Price Targets Point to More Upside for NVIDIA
NVIDIA’s average price target from 48 analysts is $327.71, implying 45.6% upside from its Sept. 25 close of $225.07. The forecasts range from a low of $180.00 to a high of $515.00. NVDA has a Zacks Rank #1 (Strong Buy).
AMD’s average target from 42 analysts is $627.38, implying 0.52% downside from $630.63, recorded on September 25. AMD has a Zacks Rank #3 (Hold).
Semiconductor & AI ETFs in Focus
While NVDA looks to be a better bet currently, investors can access both stocks through a basket approach.iShares Semiconductor ETF (SOXX - Free Report) , VanEck Fabless Semiconductor ETF (SMHX - Free Report) , and Invesco AI and Next Gen Software ETF (IGPT - Free Report) hold both stocks in substantial weights.