For investors seeking a top artificial intelligence (AI) stock, Nvidia often comes to mind due to its early lead in developing AI chips, which has positioned it as the dominant player in this lucrative market. However, Nvidia's high valuation may deter some investors from buying its stock, prompting them to explore alternatives. One potential competitor to consider is Advanced Micro Devices (AMD). In an effort to challenge Nvidia's dominance, AMD has launched its own MI300 series of AI accelerators, providing a cost-effective option for customers unable to purchase Nvidia's pricier chips. Recently, Oracle selected AMD's MI300X chips for its OCI Compute Supercluster instance, highlighting AMD’s strengthening position in the market.

Furthermore, AMD plans to introduce the MI325X chips later this year, which will enhance memory capacity and data bandwidth significantly. In 2025, AMD is set to release its updated CDNA architecture, which promises boosted computational power. While AMD's overall financial performance may currently be unimpressive—showing a modest revenue increase of 6% in the first half of the year—its data center segment focused on AI chips experienced substantial growth, with revenue soaring by 98% year-over-year to $5. 2 billion. This segment has now become a larger part of AMD’s revenue, mirroring the trend at Nvidia, where AI accelerators are increasingly driving growth. Despite a stock price increase of only 15% this year compared to Nvidia's remarkable 155% rise, AMD trades at a more attractive price-to-sales (P/S) ratio of 12, in stark contrast to Nvidia’s P/S ratio of 33. Should AMD continue to close the gap in AI chip production and return its struggling gaming and embedded segments to growth, the stock may have significant upside potential. In summary, while Nvidia may be viewed as a top choice for AI investments, AMD presents a viable alternative with considerable growth prospects, particularly as it enhances its AI chip offerings and improves financial performance across its segments.