AMD’s Moment of a Pounce Is Here’s Why Now could be a unique opportunity to buy shares.

For the past few years, investors haven’t been able to buy semiconductor stocks fast enough. One of the main reasons is that advanced integrated circuits known as graphics processing units (GPUs) are a key source of power for artificial intelligence (AI) applications like machine learning and even autonomous driving.

As the AI ​​narrative continues to push markets higher, chip stocks are likely to remain in high demand. As they are today, Nvidia is widely considered the market leader among AI-powered chip companies. However, Nvidia just informed investors that the company’s new Blackwell-series GPUs will be delayed due to a design flaw.

While I am not a fan of Schadenfreude, I believe that this defeat of Nvidia is a once in a lifetime moment for its biggest competitor, Advanced Micro Devices (NASDAQ:AMD)Let’s take a look at the whole situation and assess how AMD could take advantage of Nvidia’s misfortune.

A Tale of Two Chip Companies

The charts below illustrate a number of important financial metrics for Nvidia and AMD.

On one side of the equation, Nvidia’s sales and profits are steadily rising, leading to the increasingly steep slope of the colored lines shown below. On the other side, Nvidia’s main rival is showing noticeable inconsistencies in its performance.

The dynamics outlined above clearly indicate that chip buyers not only favor Nvidia, but are also willing to pay the highest price. While Nvidia has remained the top semiconductor company since the beginning of the AI ​​revolution, AMD now has an incredible opportunity to surpass Nvidia.

Why this could be a defining moment for AMD

Wall Street analysts estimate that Nvidia has nearly 80% of the AI-based chip market. While AMD has done its best to compete with Nvidia’s breakneck pace of innovation, I think the company has largely tried to lure investors away from Nvidia’s overwhelming lead through a series of questionable acquisitions.

As far as I’m concerned, AMD’s time is running out and they can no longer afford to rely on acquisitions as a source of product development and inorganic growth. The only positive for AMD is that the company’s MI300X GPU accelerator is the fastest product to reach $1 billion in sales in the company’s history.

Sure, AMD’s GPU demand is strong, but it’s nowhere near as broad as Nvidia’s. Now, with Blackwell’s shipments delayed until possibly next year, AMD has a chance to seize the moment.

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It’s important to stay grounded

While Blackwell’s delays are by no means good news, investors need to be realistic. I suspect some companies will move on to alternatives to Blackwell in the meantime, but I don’t think Nvidia will have a hard time selling these chips once it finally fixes its design flaw.

So while AMD is unlikely to suddenly grab a huge chunk of market share and dethrone Nvidia, I think the company has a chance to improve its image by disrupting Nvidia’s dominant position.

For now, investors will be nearly unable to tell whether AMD is penetrating the market, while Nvidia is focused on righting the Blackwell ship. I think it might be prudent to monitor press releases from major AI developers like Microsoft, Amazon, AlphabetOr Oracle and see if any of them enter into new cooperation with AMD or purchase more MI300X chips.

While I don’t currently own AMD stock, I’m intrigued by the current dynamics of the silicon market and see the company as both a hedge against Nvidia and something of a long-term call option on the broader AI market.

Investors with a higher risk tolerance, however, may want to consider buying AMD now. Given that the company plays second fiddle to Nvidia, it’s hard to imagine a scenario where AMD falls behind in the face of Blackwell’s situation.

Another strategy could be to wait a few months until AMD releases its next earnings report and see if the company has generated abnormal growth compared to previous periods. Investors should also listen to management’s comments on the source of new business.

In any case, I am confident that AMD will capitalize on Nvidia’s stumble and perhaps create the catalyst needed for long-term, sustainable growth as the two companies continue to compete in the silicon market.

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Suzanne Frey, a director at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, a subsidiary of Amazon, is a member of The Motley Fool’s board of directors. Adam Spatacco holds positions in Alphabet, Amazon, Microsoft, and Nvidia. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Amazon, Microsoft, Nvidia, and Oracle. The Motley Fool recommends the following options: long January 2026 $395 call options on Microsoft and short January 2026 $405 call options on Microsoft. The Motley Fool has a disclosure policy.

AMD’s Moment of a Pounce Is Here. Here’s Why Now Could Be a Unique Time to Buy Stocks. was originally published by The Motley Fool