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Artificial intelligence (AI) stocks bore the brunt of the market reaction to the U.S. mid-term election results, as concerns over tighter data center regulations and a rise in capital expenditure unnerved investors. The tech-laden Nasdaq, in particular, fell 5.5% on Nov. 5, registering its worst one-day decline since April 2025. A Democratic sweep in Congress fueled fears of stricter restrictions on data center construction, while investors questioned whether massive AI investment could deliver substantial returns.
Leading AI players, including NVIDIA Corporation (NVDA - Free Report) and Advanced Micro Devices, Inc. (AMD - Free Report) , weren’t spared either, with their shares plummeting 9.3% and 17.3%, respectively, yesterday. Despite these short-term market jitters, both NVIDIA and AMD remain well-poised to bounce back, banking on long-term demand for AI chips and data center infrastructure. Therefore, the key question for investors is: with both stocks suffering sharp losses, which one offers the more attractive entry point and is the better buy on the dip? Let’s have a look –
Reasons to Be Bullish on NVIDIA
NVIDIA anticipates that its revenue growth momentum will remain strong in the future. The company expects fiscal third-quarter 2027 revenues of $108 billion, plus or minus 2%, according to the company’s Aug. 26 press release. That would be more than fiscal second-quarter 2027 revenues of $96 billion, which were up 106% year over year and 18% sequentially.
Revenue growth in the fiscal second quarter was largely driven by its Data Center business, where revenues climbed 117% to $89 billion. Furthermore, NVIDIA’s Vera Rubin platform is now in full production, strengthening the company’s position to capitalize on rising long-term demand for AI infrastructure and support sustained revenue growth.
Alongside revenue growth, NVIDIA expects its profitability to strengthen. Its gross margin expanded to 75% in the fiscal second quarter, up from 72.4% in the year-ago quarter. The company also reported steady improvements in net income and GAAP operating income, reflecting improving profitability.
Reasons to Be Bullish on AMD
Like NVIDIA, AMD also strengthened its position as a key supplier to AI infrastructure. According to the company’s Nov. 3 press release, its fiscal third-quarter 2026 revenues were $13.38 billion, up 45% year over year and 16% sequentially.
Robust demand for Instinct GPUs, EPYC CPUs, and rack-scale AI systems fueled a 97% year-over-year surge in AMD’s Data Center revenue to a record $8.5 billion. AMD’s profitability improved significantly, with GAAP operating income surging 123% year over year, while non-GAAP earnings per share increased 74% to $2.09.
The company’s fourth-quarter outlook also looks promising. Management expects revenues to grow 66% year over year and approximately 27% sequentially to $17 billion, plus or minus 3%, reflecting strong demand for AMD’s AI and Data Center products.
NVDA or AMD: Which AI Stock Is the Better Buy-the-Dip Opportunity?
Both NVIDIA and AMD reported strong quarterly results, fueled by accelerating data center growth and upbeat guidance. However, their profitability outlooks differ. NVIDIA’s future profitability appears robust, while AMD may face margin pressures, as its projected non-GAAP margin for the fiscal fourth quarter is slightly lower than that of the third quarter, alongside signs of weakness in the gaming business.
Moreover, NVIDIA appears more efficient than AMD at generating profits from shareholders’ equity. This is because NVIDIA’s return on equity (ROE) of 96% exceeds AMD’s ROE of 16.8%.
Image Source: Zacks Investment Research
Therefore, NVIDIA seems to be the better buy-the-dip opportunity than AMD, given its superior profitability and significantly higher ROE. NVIDIA currently has a Zacks Rank #2 (Buy), while AMD has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.
View the Zacks #1 Rank List
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NVIDIA and AMD Sell-Off: Which AI Stock Is the Better Buy on the Dip?
Key Takeaways
Artificial intelligence (AI) stocks bore the brunt of the market reaction to the U.S. mid-term election results, as concerns over tighter data center regulations and a rise in capital expenditure unnerved investors. The tech-laden Nasdaq, in particular, fell 5.5% on Nov. 5, registering its worst one-day decline since April 2025. A Democratic sweep in Congress fueled fears of stricter restrictions on data center construction, while investors questioned whether massive AI investment could deliver substantial returns.
Leading AI players, including NVIDIA Corporation (NVDA - Free Report) and Advanced Micro Devices, Inc. (AMD - Free Report) , weren’t spared either, with their shares plummeting 9.3% and 17.3%, respectively, yesterday. Despite these short-term market jitters, both NVIDIA and AMD remain well-poised to bounce back, banking on long-term demand for AI chips and data center infrastructure. Therefore, the key question for investors is: with both stocks suffering sharp losses, which one offers the more attractive entry point and is the better buy on the dip? Let’s have a look –
Reasons to Be Bullish on NVIDIA
NVIDIA anticipates that its revenue growth momentum will remain strong in the future. The company expects fiscal third-quarter 2027 revenues of $108 billion, plus or minus 2%, according to the company’s Aug. 26 press release. That would be more than fiscal second-quarter 2027 revenues of $96 billion, which were up 106% year over year and 18% sequentially.
Revenue growth in the fiscal second quarter was largely driven by its Data Center business, where revenues climbed 117% to $89 billion. Furthermore, NVIDIA’s Vera Rubin platform is now in full production, strengthening the company’s position to capitalize on rising long-term demand for AI infrastructure and support sustained revenue growth.
Alongside revenue growth, NVIDIA expects its profitability to strengthen. Its gross margin expanded to 75% in the fiscal second quarter, up from 72.4% in the year-ago quarter. The company also reported steady improvements in net income and GAAP operating income, reflecting improving profitability.
Reasons to Be Bullish on AMD
Like NVIDIA, AMD also strengthened its position as a key supplier to AI infrastructure. According to the company’s Nov. 3 press release, its fiscal third-quarter 2026 revenues were $13.38 billion, up 45% year over year and 16% sequentially.
Robust demand for Instinct GPUs, EPYC CPUs, and rack-scale AI systems fueled a 97% year-over-year surge in AMD’s Data Center revenue to a record $8.5 billion. AMD’s profitability improved significantly, with GAAP operating income surging 123% year over year, while non-GAAP earnings per share increased 74% to $2.09.
The company’s fourth-quarter outlook also looks promising. Management expects revenues to grow 66% year over year and approximately 27% sequentially to $17 billion, plus or minus 3%, reflecting strong demand for AMD’s AI and Data Center products.
NVDA or AMD: Which AI Stock Is the Better Buy-the-Dip Opportunity?
Both NVIDIA and AMD reported strong quarterly results, fueled by accelerating data center growth and upbeat guidance. However, their profitability outlooks differ. NVIDIA’s future profitability appears robust, while AMD may face margin pressures, as its projected non-GAAP margin for the fiscal fourth quarter is slightly lower than that of the third quarter, alongside signs of weakness in the gaming business.
Moreover, NVIDIA appears more efficient than AMD at generating profits from shareholders’ equity. This is because NVIDIA’s return on equity (ROE) of 96% exceeds AMD’s ROE of 16.8%.
Image Source: Zacks Investment Research
Therefore, NVIDIA seems to be the better buy-the-dip opportunity than AMD, given its superior profitability and significantly higher ROE. NVIDIA currently has a Zacks Rank #2 (Buy), while AMD has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.