17.06.2024 Issuer Call Redemption Notice

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Sandeep Rao


Can AMD Hit $1 Trillion Market Capitalization?

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Nearly a month before Nvidia’s consensus-beating earnings for Q1, rival Advanced Micro Devices Inc (NASDAQ: AMD) released its earnings for the same period, which also beat consensus estimates. Both companies – often compared to each other – have had markedly different performance in the Year Till Date (YTD) up until this past Friday: while Nvidia had risen 127.6%, AMD had risen only 20.4%.

This might be slightly unfair, given that both companies’ current addressable markets aren’t necessarily the same.

Trend Analysis

Using the same comparison metrics as those employed in the article describing Nvidia’s Q1 earnings1, AMD’s metrics suggest that AMD is on the cusp of transformation.

Websim is the retail division of Intermonte, the primary intermediary of the Italian stock exchange for institutional investors. Leverage Shares often features in its speculative analysis based on macros/fundamentals. However, the information is published in Italian. To provide better information for our non-Italian investors, we bring to you a quick translation of the analysis they present to Italian retail investors. To ensure rapid delivery, text in the charts will not be translated. The views expressed here are of Websim. Leverage Shares in no way endorses these views. If you are unsure about the suitability of an investment, please seek financial advice. View the original at

Source: Company Information; Leverage Shares analysis

While Nvidia’s revenues have traditionally lapped those of AMD by some margin, 2022 was the year both drew up about par. 2023, however, saw Nvidia pile on gains by progressively stronger focus on a corporate clientele via its Data Center segment – resulting in revenues four times as much as its rival the next year.

However, Nvidia’s clientele shift was a work many years in the making. AMD’s higher operating expenses – as well as R&D expenses – in 2022 and 2023 suggest that a similar reorientation is being ventured into by AMD. In Q1, while R&D expenses have remained comparatively high relative to revenues (or sales) as in the two previous full years, net operating expenses have seen a net drop.

This has been enormously transformative for the company’s pass-through rate from revenues to net income, which is back at 19% (last seen in 2021). When compared against trends seen in Nvidia, 2024 for AMD is roughly comparable to 2022 (Nvidia’s FY 2023): a low net income pass-through and high operating expenses paved the way for explosive growth in net income pass-through and lower operating expenses as the corporate clientele poured in.

Just as with NVIDIA in 2022, roughly half of AMD’s Q1 2024 revenue is attributable to its Data Center segment. Unlike NVIDIA, only half as much revenue is attributable to Gaming. Also unlike NVIDIA is revenue contributions from Client and Embedded segments, which collectively make up 40% of AMD’s revenue unlike 9% in NVIDIA’s case in 2022. In the most recent quarter, NVIDIA’s contributions from these two segments have dwindled to 3%.

In the most recent quarter, AMD states that its Data Center segment is driven by sales of Instinct MI300 GPUs and 4th Gen EPYC CPUs, which is slightly different from NVIDIA’s strategy of driving sales via cutting-edge GPUs – which tend to be pricier than CPUs and have stronger performance characteristics. AMD also reports that that the MI300 ecosystem continues to be driven forward by an evolution of its ecosystem via software-driven optimizations via the ROCm 6.1 stack. A number of its clients – such as Lenovo, Samsung and Vodafone – have demonstrated that software-driven AI optimization unlocks improved performance in its EPYC CPUs as well.

Much like NVIDIA, gaming is becoming less important to AMD’s bottom line. Substantial growth via gamer adoption is unlikely to be a byword for these companies’ performance, unlike in the past. The way forward seems to be the “corporate” and 2025 might be a flagship year for AMD in terms of revenue growth and earnings pass-through.

Market Behaviour and Conclusion

Across 2023 till the present, the 15-day average daily traded volume of AMD is 34% higher than NVIDIA’s.

Source: Leverage Shares analysis

Relative to NVIDIA, however, overall trading volumes suggest a “zero-sum” dynamic tends be at play between the two stocks wherein the relative volume trend of one stock historically runs counter to that of the other. There isn’t a strong rationale to this, given that while the corporate sector’s buy-in tends to be sustained and orderly, it isn’t necessarily insensitive to price; sustained lock-in would be dependent on best cost/value realizations. AMD and NVDIA currently occupy different parts of price/performance spectrum and every part of the spectrum receives a fair bit of corporate attention. As upgrade cycles turn, there is ample opportunity for mixed-mode optimization.

All in all, AMD is likely to see increased attention in tactical trading and long-term holding patterns. A trillion-dollar capitalization isn’t entirely out of the question. Professional investors can consider Leverage Shares’ products built specifically to monetize on bullish or bearish trends by considering the likes of AMD3 and AMDS respectively.


  1. “Nvidia Q1 Earnings: Data Center Surge, Rising Risk”, Leverage Shares, 27 May 2024

Your capital is at risk if you invest. You could lose all your investment. Please see the full risk warning here.

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