Originally published on InvestorPlace.com
Most people will go their whole lives without capturing a 1,000% gain. But one Wall Street veteran may have cracked the code. During his career of nearly 50 years, Marc Chaikin was one of the quantitative mind behind some of the most famous investors in history: Paul Tudor Jones, George Soros, Steve Cohen, and Michael Steinhardt. Even the Nasdaq hired him to create three new indices. All because Chaikin built the Wall Street system for detecting 10X stocks.
- It flashed “buy” on vaccine-makers Novavax (NVAX) and BioNTech (BNTX), months before the pandemic even began.
BioNTech (BNTX) quickly surged 2,188%. Novavax (NVAX) shot up 7,612%.
- It flashed “buy” on EV stock Blink Charging (BLNK), before it jumped 1,433%.
- And even RIOT Blockchain (RIOT)… right before Bitcoin shot past $60,000… and sent RIOT up 10,090% in less than a year.
Since then, Chaikin's gained over 1 million followers – and one of the best reputations in the financial world. His system has pinpointed dozens of stocks that went onto soar 100% to 1,000%, often in less than a year. And today, he's doing it all over again, for the hottest investment trend of 2023:
I just sat down with Chaikin for a “tell-all” interview, where he revealed the name and ticker of his favorite A.I. stock of 2023. His system flashed “buy” on both Nvidia (NVDA) and Meta (META) before their extraordinary runups earlier this year. But he says that's nothing compared what's in store for this “under-the-radar” A.I. stock. He told me, “This company just teamed up with one of the biggest power players in the A.I. industry – but you can still buy it for just one-twelfth the price of Nvidia (NVDA). The time to buy is NOW.” To see Chaikin's full prediction for yourself, simply click here. You'll get this stock's name and ticker symbol, absolutely free.
AMD (NASDAQ:AMD) just delivered yet another strong earnings beat yet provided typically cautious guidance looking ahead once again. Meanwhile, major AMD stock rival, Nvidia (NASDAQ:NVDA), has been posting blowout results fueled by rampant AI chip demand and giving bold projections for massive growth ahead.
In my view, AMD now looks like the superior chip stock to own for the long term versus NVDA, which trades at sky-high valuations. While NVDA is executing amazingly currently, I believe AMD offers a better risk-reward outlook.
AMD Executing Well, but Is the Valuation Reasonable?
There is no doubt AMD is executing tremendously right now, as evidenced by its latest top and bottom line beat driven by server and PC chip strength. However, management only guided conservatively higher for the next quarter, continuing its trend of strong upside results but cautious outlooks.
This contrasts sharply with NVDA, which has posted simply eye-popping numbers quarter after quarter recently, driven largely by booming demand for its AI accelerators. Bulls are expecting NVDA’s data center chip sales to double next year, with its forward P/E ratio still above 41x.
In my opinion, it will be highly challenging for NVDA to fully achieve its multi-year targets for AI chip dominance and growth. There remains a tremendous amount of uncertainty regarding the total addressable market size for AI chips and whether the margins will prove sustainable in the long term.
Meanwhile, NVDA still trades at a nosebleed valuation of over 20x forward sales, pricing in the AI euphoria being realized to the fullest extent. Any major hiccups or stumbles could spell big trouble for the trillion-dollar chip giant.
Mounting Competition Could Place AMD in Line for the AI Lead
Additionally, I expect mounting competition to emerge in the AI chip space over the next few years, especially from AMD. Many NVDA bulls continue dismissing this threat, but AMD has a proven track record now of bringing solid competition to the table after its success in CPU and server chips versus Intel(NASDAQ:INTC).
With AMD’s transformative acquisition of Xilinx last year, it gained a strong foundation on the FPGA and software side to build up its AI chip capabilities. I believe AMD has both the talent and roadmap to start chipping away at NVDA’s AI chip dominance.
Certainly, NVDA still holds a commanding lead for now, especially in the highest-end accelerators. But many said the same about Intel’s server chips just a few years ago. Now, AMD has managed to take a significant market share in that category.
Meanwhile, AMD still trades at a very reasonable valuation of just 8x forward sales, which seems attractive for a company with strong growth prospects. If AMD can execute even moderately well in ramping up its AI chip business alongside its server chips, its EPS growth could swell rapidly in the coming years.
Many bullish analysts see over 30% annual earnings growth potential for AMD over the next five years. That could put AMD’s forward P/E ratio somewhere below 13x for 2027 profits if realized. To me, AMD’s risk-reward outlook seems vastly superior currently compared to NVDA’s sky-high valuations.
My Verdict: AMD Offers More Realistic Upside Potential
To summarize, my current verdict is that AMD presents a far more favorable risk-reward profile in comparison to NVDA stock right now. AMD has executed tremendously well lately yet still trades at a very reasonable valuation.
It offers truly enormous profit growth potential ahead if it can gain even moderate market share in AI chips to complement its growing server CPU business. Meanwhile, near-flawless execution for years seems already priced into NVDA at current levels.
Its premium valuation leaves little to no margin for error, especially as I expect competitors led by AMD will fiercely vie for share in the exploding AI chip market. NVDA will likely retain its clear lead for now, but market dynamics invariably shift over time. Simply put, paying 8x sales for AMD seems like a superior bet over 20x sales for NVDA when considering future growth prospects. The forward earnings multiple is very similar in the near term, but it also starts to favor AMD in a multi-year timeframe.
The Bottom Line
In short, AMD stock at current levels offers a promising opportunity for substantial long-term gains if execution remains solid. Meanwhile, it’s unclear whether pricy NVDA can generate enough sustained growth to justify its near $1 trillion valuation.
Naturally, it’s improbable that NVDA fully collapses anytime soon. But the risk-reward profile appears skewed to the downside at today’s heights. I believe AMD provides a far better risk-reward setup for tech investors searching for a realistic upside.
I love studying great companies and their founders. And in the vast global marketplace today, there are a myriad of unique business stories constantly unfolding. Not least of which in 2023, is the rise of artificial intelligence. But the business story I want to share with you today goes far beyond the competitive nature of boardrooms… and dare I say, transcends bloodlines. Resulting in what some would classify as a family feud to the nth degree. Here's what I mean. Jensen Huang is the founder and CEO of the AI microchip maker, NVIDIA. As you likely know, NVIDIA is the primary stock success story of the year so far. With an incredible year to date gain of 221%. But when NVIDIA went public in 1999, its market cap was a mere $1.5 billion. However, in the two decades since, Huang has led NVIDIA to an incredible $1.14 trillion market cap this year. To date, NVIDIA has seen an amazing, all-time gain of 56,019%. NVIDIA is putting its AI tech into everything these days, including video games, movies, robots and even self-driving cars. “The race is on to adopt generative AI,” Huang said in a statement. “A new computing era has begun.” That's why Barron's reports that under Huang, NVIDIA “expanded its technology leadership, making it difficult for rivals to compete effectively.” But Huang's biggest competitor, Advanced Micro Dynamics (AMD), is making big money moves in AI of its own. And Jensen Huang just so happens to be the uncle of AMD's CEO, Lisa Su. In 2013, the year before Su joined AMD, the tech giant was at a low point with a diminished market cap of $1.78 billion. But according to Forbes, after Su took AMD's reigns in 2014, the stock soared 30-fold, creating “one of the greatest recent turnarounds in the technology sector.” And leading to AMD's current $165 billion market cap. Which means under Su's leadership, AMD has seen an astounding 9,162% gain in a little less than 10 years. Although AMD has a way to go before it catches up to Nvidia, Su seems to be preparing for battle against her uncle in the AI revolution. When asked about AMD's plans, Su declared, “You will see AI in every single product at AMD, and it will be the largest growth driver.” Now doesn't she sound like a micro-chip off the old block? But as you can tell, these AI tech CEOs aren't playing around. And many experts believe we're just entering the start of the AI boom. That's why AI has been called the biggest new industry of the 21st century. Worth a staggering $80 trillion over the next ten years. And Chief Investment Strategist Adam O'Dell saw it coming a long time ago. In fact, Adam labeled the fastest-growing sector of the artificial intelligence industry as “x.AI” a whole 15 months before Elon Musk announced his newest AI-based company by the same name. Recently, Adam uncovered exciting, new research that shows a number of promising, high-quality AI stocks just like NVIDIA and AMD that could go on to SURGE in the coming years. So even if you missed out on the rare, incredible, and once-in-lifetime type gains of NVIDA or Advanced Micro Devices, don't worry. Adam is revealing details on his favorite AI stocks for you right now. But only for a limited time. Click here to see the full story now.