The stock market is pricing one chip company as if it will need to double its earnings again after next year just to justify today's share price, even though its larger rival is already growing faster. That pricing dynamic centers on the forward price-to-earnings multiple: the ratio of a stock's current price to its projected future earnings. By that measure, Advanced Micro Devices (NASDAQ: AMD) would trade at 33 times expected 2027 earnings at current prices, while Nvidia (NASDAQ: NVDA) trades at 17.6 times the same period.
AMD's run has been striking. The stock is up roughly 125% in 2026 and about 300% since the start of 2025. Nvidia is up around 20% this year and 67% over the same stretch. Watching those numbers alone, you would expect AMD to be the dominant business. It is not.
What the business results actually show
Nvidia and AMD do not share a fiscal calendar, which complicates direct comparisons. Nvidia's fiscal year closes roughly one month after AMD's calendar-year quarters. Nvidia's fiscal first quarter of 2027, ended April 2026, showed revenue rising 85% year over year to $81.6 billion, with diluted earnings per share up 214%. AMD's second quarter, ended June 30, showed revenue rising 50% to $11.5 billion, with diluted EPS up 156%.
Data center revenue is where AI spending flows most directly, and here the gap narrows. AMD's data center division grew 107% in its latest quarter. Nvidia's grew 92% in the earlier reported period. Those two figures do not cover identical calendar intervals, and Nvidia has not yet released its equivalent quarter results.
The valuation problem
The spread between AMD at 33 times projected 2027 earnings and Nvidia at 17.6 times is substantial. For AMD's multiple to converge with Nvidia's, AMD would need to approximately double its earnings beyond what 2027 projections already assume, while the stock price stays flat. That is a demanding condition.
Because both companies operate in the same chip sector, their long-term multiples would ordinarily trend toward each other over time. The current gap means AMD's shareholders are paying now for growth that has not yet arrived. Nvidia's shareholders are paying considerably less for a business that is already larger and, by revenue, growing faster.
AMD has had a historic run, and the business is genuinely expanding. The price already reflects that. Nvidia's forward multiple sits at 17.6 times projected 2027 earnings.