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

A recent analysis compares AMD and Semtech (SMTC), both positioned to benefit from the semiconductor industry's projected growth to $958.93 billion by 2030. While AMD sees gains from its data center EPYC processors (with revenues up 57.2% YoY in Q1 2025), Semtech is experiencing growth driven by its CopperEdge and FiberEdge solutions for data centers (revenues up 143% YoY in Q1 fiscal 2026). Despite both stocks being currently overvalued, SMTC is considered to have greater upside potential due to its higher earnings surprise history and a Zacks Rank #2 (Buy) compared to AMD's Zacks Rank #3 (Hold).

Analysis

The semiconductor industry is projected for robust expansion, with Mordor Intelligence forecasting market revenue growth from $631.01 billion in 2025 to $958.93 billion by 2030, a CAGR of 8.73%, and shipment volumes increasing at a CAGR of 10.32% during the same period. Advanced Micro Devices (AMD) is capitalizing on this trend, particularly with its data center revenues surging 57.2% year-over-year to $3.674 billion in Q1 2025, constituting 49.4% of total revenues, driven by strong adoption of EPYC processors and Instinct AI accelerators by hyperscalers like Oracle and Google Cloud. AMD also recently launched its EPYC 4005 Series processors for SMBs. However, AMD faces headwinds from intense competition, notably from NVIDIA, and regulatory challenges such as export controls on certain GPUs. Semtech (SMTC) is also exhibiting strong performance in the data center market, with revenues hitting a record $51.6 million in Q1 fiscal 2026, up 143% year-over-year, propelled by demand for its CopperEdge and FiberEdge solutions, including new offerings for 800G and 1.6T connectivity. Despite these positive operational developments, both AMD and SMTC shares have underperformed year-to-date, declining 2.8% and 38.5% respectively, attributed to macroeconomic pressures and tech sector weakness. Valuation analysis indicates both stocks are currently overvalued with a Value Score of D; AMD trades at a forward 12-month Price/Sales ratio of 5.65X, while SMTC is at 3.09X. Zacks Consensus Estimates project AMD's 2025 earnings at $4.02 per share (a 21.45% YoY increase, though revised down 4.96% recently), and SMTC's fiscal 2026 earnings at $1.66 per share (an 88.64% YoY increase, revised down 2.3% recently). SMTC demonstrates a higher average earnings surprise of 10.83% over the trailing four quarters compared to AMD's 2.30%, and currently holds a Zacks Rank #2 (Buy), positioning it as a potentially stronger pick than AMD, which has a Zacks Rank #3 (Hold).

Key Decisions for Investors

• Investors should acknowledge the strong secular growth in the semiconductor market, particularly in AI and data centers, which provides a tailwind for both AMD and SMTC, but note that both stocks are currently considered overvalued based on their Value Score D and specific Price/Sales multiples.
• While AMD demonstrates significant data center revenue growth and expanding EPYC adoption, investors should weigh this against intense competition, regulatory risks such as export controls, its recent downward earnings estimate revision, and its current Zacks Rank #3 (Hold) before significantly increasing exposure.
• Semtech, despite its substantial year-to-date share price decline of 38.5%, presents a potentially more compelling case due to its strong 143% year-over-year data center revenue growth, innovative product launches like CopperEdge, a higher projected earnings growth rate for fiscal 2026 at 88.64% year-over-year, a superior historical earnings surprise of 10.83%, and a Zacks Rank #2 (Buy), though its overvaluation also warrants careful consideration.
• It is prudent to monitor macroeconomic conditions and tech sector sentiment, which have recently impacted both stocks, and watch for any further revisions to earnings estimates for both companies as these could influence investment theses.