Forget Nvidia: Members of Congress are snapping up shares of their archrival instead.

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There is a much more popular AI stock on Capitol Hill than the leading AI chip maker.

Nvidia (NVDA 6.18%) Artificial intelligence (AI) is the 800-pound gorilla. The demand for its chips is through the roof. Its shares rose 239% last year, and are up nearly 60% so far in 2024.

But Nvidia isn't the only AI company that's popular with investors, and is another company that has particularly favored the people voters have sent to work on Capitol Hill. Members of Congress are instead scoping out shares of Nvidia's chief rival.

Out with Nvidia, in with AMD

Nvidia is among the top 10 best-selling stocks in 2023. This trend continued this year, with sell transactions outnumbering buy transactions by a ratio of 2 to 1.

It's a completely different story with him. Advanced Micro Devices (AMD 2.37%), Although. To date, there have been 11 buys of AMD shares by members of Congress, compared to only three sell transactions, according to Capital Trades.

The purchase has been two-way. Rep. Josh Gottheimer, Democrat of New Jersey, and Rep. Michael McCaul, Republican of Texas, have bought AMD shares several times in 2024.

AMD appeal

Members of Congress must disclose all of their trades, but they are not required to disclose why they buy and sell specific stocks. It's not hard to see why AMD appeals to some lawmakers.

AMD has so far lagged behind Nvidia in the AI ​​chip market. However, it hopes to take some market share from its larger rival — and perhaps succeed in those efforts.

In December, AMD unveiled its MI300X AI accelerator and its Instinct MI300A accelerated processing unit. The company claims that the MI300X chip holds its own against Nvidia's H100 graphics processing unit in training large language models. And AMD kept its new chip beating the H100 GPU in AI inference (the process by which AI models draw conclusions from data).

Also, earlier this month, AMD rolled out its Ryzen line of AI chips for desktops and laptops. It called the new chips “the most advanced x86 processors for AI PCs.” PC manufacturers incl HP And Lenovo AMD is expected to introduce products with new chips this quarter.

Importantly, AMD doesn't need to beat Nvidia in the AI ​​chip market to be a huge winner. Demand for AI chips should be high enough for years to come that a company that takes a second hit at this point will still make pretty music for investors.

Is AMD a better AI stock to buy than Nvidia?

Members of Congress seem to prefer AMD over Nvidia these days. But do they have a right to feel that way? Is AMD a better AI stock to buy than Nvidia?

Both stocks are expensive based on a popular valuation metric: AMD trades at a forward price-to-earnings ratio of 45.7, while Nvidia's forward earnings multiple is around 34.3. However, these metrics are only based on next year's revenue projections.

It's a good case that AMD can outpace Nvidia over the next five years. Technology companies, especially large ones, don't want to become too dependent on one source for chips, and have stuck with Nvidia when it comes to AI silicon. AMD could be an attractive alternative if it can deliver comparable performance at a lower price.

Nvidia can modernize AMD and maintain its commanding market share lead. Right now, though, I'm on the same page as the politicians on Capitol Hill who see AMD as a better stock to buy.

Keith Speights has no positions in any stocks. The Motley Fool has positions in and recommends Advanced Micro Devices, HP, and Nvidia. The Motley Fool has a Disclosure Policy.

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