Why You Should Buy NVIDIA, Not AMD

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- By Naman Shukla

I have been bullish on both NVIDIA (NVDA) and Advanced Micro Devices (AMD) recently. Both stocks have rallied strongly since my bullish calls. That being said, while I am still bullish on NVIDIA, I think AMD investors should be looking to book profits and taking gains off the table.

There are several reasons to be bullish on NVIDIA despite the chipmakeras towering valuation, and two of them are mentioned below.


NVIDIA is the leader

Advanced Micro Devices lost almost every battle against NVIDIA in the previous year and lost considerable amount of market share as well. In 2015, NVIDIA was the leader in the graphics cards market and has also taken the lead over AMD this year by introducing its new Pascal architecture.

NVIDIA is about to launch its new graphics card GTX 1080 based on Pascal architecture, and AMD has yet to introduce its new Polaris architecture. NVIDIA has strategies to aim at the high-end graphics cards segment, therefore GTX 1080 is specifically designed to attract high-end graphics cards users. However, AMDas strategy is entirely different as compared to NVIDIAas strategy, as AMD focuses on the mainstream market.

Apart from this, NVIDIAas Pascal architecture is highly efficient and can be used for AI, virtual reality, gaming, and augmented reality purposes. Moreover, with time, as consumer PCs, data centers, self-driving cars get used to these technologies, NVIDIA will gain huge profits.

GTX 1080 bomb

NVIDIA has recently released its new Pascal architecture, and is on its way to launch GTX 1080, a graphics card based on Pascal architecture. NVIDIA claims that GTX 1080 will be priced considerably lower and offer twice the performance than Titan GPU.

NVIDIAas GTX 1080 has a base clock frequency of 1,607 MHz whereas its boost clock is fixed at 1,733 MHz. Keeping in mind the following specifications, GTX 1080 will provide an outstanding computation capacity of 8.9 teraflops. The company has designed GTX 1080 in such a way so that it appeals high-end graphics cards users.

It is predicted that NVIDIAas GTX will be available for around $599 and will provide a massive performance/price boost equated to the prior generations. GTX 1080 also has a characteristic that allows the company to manufacture a much smaller chip, reducing costs as well as power consumption.

The GTX 1080 appears to be more even, delivering a more constant frame rate and a free from dropped frames in those DX12 games, whereas AMDas Fury X still slogs in spite of its GCN architecture.

Conclusion

NVIDIA has proven to be a winning investment, and given the positives, it will likely be a winner in the long-term as well. While AMDas stock performance has bettered NVIDIAas, I think NVIDIA will most likely do a lot better in the long term.

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This article first appeared on GuruFocus.


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