AMD vs. Semtech: Which Semiconductor Stock Is the Better Buy Now?

A recent analysis from Zacks Investment Research compares AMD and Semtech, both positioned to benefit from the semiconductor industry's projected growth to $958.93 billion by 2030. While AMD is leveraging its EPYC processors for data center growth (with data center revenues up 57.2% YOY), Semtech is experiencing significant datacenter revenue growth (up 143% YOY) driven by demand for its CopperEdge and FiberEdge solutions; despite both stocks being currently overvalued, Semtech is presented as potentially offering greater upside due to a higher earnings surprise history, though AMD faces challenges including competition from NVIDIA and export controls.

Analysis

The semiconductor industry is poised for significant expansion, projected by Mordor Intelligence to grow from $631.01 billion in 2025 to $958.93 billion by 2030, at an 8.73% CAGR, primarily fueled by AI and data center demand. Within this landscape, Advanced Micro Devices (AMD) demonstrated robust data center segment growth, with revenues surging 57.2% year-over-year to $3.674 billion in Q1 2025, driven by its EPYC processors and Instinct AI accelerators. However, AMD faces headwinds from intense competition, notably from NVIDIA, and export controls on certain Instinct GPUs to China, contributing to a 2.8% year-to-date share price decline and a recent 4.96% downward revision in its 2025 earnings estimates, which are still projected to grow 21.45% year-over-year. Conversely, Semtech (SMTC) reported a striking 143% year-over-year increase in its data center revenues to a record $51.6 million in Q1 fiscal 2026, propelled by strong demand for its CopperEdge and FiberEdge solutions. Despite a more substantial year-to-date share price drop of 38.5% attributed to macroeconomic challenges, SMTC boasts a higher average earnings surprise of 10.83% over the past four quarters compared to AMD's 2.30%, and its fiscal 2026 earnings are anticipated to grow 88.64% year-over-year, though its estimates also saw a 2.3% recent decline. Both companies are currently flagged with a Zacks Value Score of D, indicating overvaluation, with AMD trading at a forward 12-month Price/Sales of 5.65X versus SMTC's 3.09X, suggesting SMTC may offer greater relative value if growth materializes as projected, aligning with the article's conclusion of greater upside potential for SMTC.

Key Decisions for Investors

• Investors should acknowledge the strong secular growth in semiconductors driven by AI and data centers, but carefully differentiate between AMD's established scale and SMTC's high-growth niche profile when assessing opportunities.
• Consider Semtech (SMTC) for its superior data center revenue growth rate of 143% year-over-year, higher historical earnings surprise of 10.83%, and stronger projected fiscal 2026 earnings increase of 88.64%, balanced against its recent significant share price decline of 38.5% and its current Zacks Rank #2 (Buy) rating.
• Evaluate Advanced Micro Devices (AMD) based on its solid EPYC processor adoption leading to 57.2% year-over-year data center revenue growth, while remaining cognizant of significant competitive pressures, regulatory risks impacting GPU sales to China, a more modest earnings surprise history, and its Zacks Rank #3 (Hold) rating.
• Given both stocks currently carry a Zacks Value Score of 'D' indicating overvaluation and have experienced year-to-date price declines attributed to a challenging macroeconomic environment, investors should closely monitor valuation multiples and evolving market conditions before initiating or adjusting positions.