NVDA, AMD or QCOM: A Top Wall Street Analyst Picks the Best AI Chip Stock to Buy

The chip industry has been getting plenty of attention in recent years, and that’s no wonder. It sits at the heart of the AI revolution, serving as the computational backbone for increasingly complex models and large-scale deployment. The advances made in chip design, manufacturing, and specialized architectures, such as GPUs and custom accelerators, are driving performance gains and improvements in efficiency. Meanwhile, the pace of AI adoption across industries has elevated chipmakers’ strategic importance, whether in technology, supply chains, or geopolitics.

As RBC’s Srini Pajjuri, an analyst ranked among the top 3% on Wall Street, notes in a recent industry report, this new paradigm has also reshaped how the industry operates.

“The unprecedented surge in AI spending has transformed the industry’s traditional cyclical patterns, creating a stark bifurcation between AI ‘haves and have-nots’” the 5-star analyst explained. “This fundamental shift makes historical semiconductor cyclical patterns less reliable, with outperformance primarily driven by AI exposure, technological differentiation, and positioning within the AI value chain rather than traditional cyclical inflections. We are positive on hyperscale capex spending, which underpins the bullish growth expectations in the sector for the next two years.”

“However,” Pajjuri further added, “investor nervousness around hyperscale capex seems high, and any spending slowdown could have a significant impact on stock prices. We see favorable risk/reward on a selective basis and recommend a balanced exposure to Semi stocks.”

Against this backdrop, Pajjuri has been sizing up the prospects of 3 AI chip giants – Nvidia (NASDAQ:NVDA), Advanced Micro Devices (NASDAQ:AMD), and Qualcomm (NASDAQ:QCOM) – and believes one clearly stands out as the most compelling opportunity for investors right now. Let’s see which one.

Nvidia

A little over 3 years ago, before the rise of ChatGPT, Nvidia was merely a semi heavyweight rather than the world’s most valuable company, its business driven mainly by gaming and data center demand rather than its central role in powering large-scale AI models.

But once the GenAI boom kicked into action, Nvidia grabbed the opportunity by the horns: simply put, given its pioneering role in GPUs (graphics processing units), it quickly emerged as the best maker of AI chips out there, setting in motion its ascent to the top of the market cap pile.

The Jensen Huang-led company initially took the street by surprise with its massive growth spurt, driven by an unprecedented surge in demand for its GPUs used in AI. As the key provider of hardware for AI data centers, Nvidia has seen its data center revenue increase by over 400% in certain quarters over the past few years. This is complemented by a growing software stack, including CUDA, networking software, and AI frameworks, which has deepened customer lock-in and expanded Nvidia’s revenue opportunity beyond silicon alone.

3 years+ into the AI bull market, and Nvidia is still showing some ultra-healthy growth trends. In the most recent readout FQ3 readout (October quarter), the company delivered record Data Center revenue of $51.2 billion, up 66% from a year ago, alongside record total revenue of $57.0 billion, an increase of 62% vs. the year-ago period.

The main discussions around Nvidia focus on whether AI infrastructure spending can remain elevated and how intensifying competition might affect its market position – the company has an ~80% share in AI accelerators, but alternatives are emerging with excellent offerings of their own.

However, RBC’s Pajjuri thinks the company is a one-of-a-kind and believes there’s a good reason why its status as the AI chip king is assured. “NVDA’s $500B+ backlog, surging inferencing demand, and accelerating enterprise AI adoption give us further conviction that current spending cycle will continue through 2026 and beyond,” the analyst opined. “Competitively, we see little risk to NVDA’s performance leadership and believe its software ecosystem is well ahead. In addition, the company’s balance sheet strength gives it a distinct strategic advantage which remains underappreciated, in our view… At 24x FY27E P/E, we believe valuation is attractive given 20-25% long term growth, 75% gross margins, and full-stack AI dominance.”

Bottom line, Pajjuri initiated coverage of NVDA with an Outperform (i.e., Buy) rating, backed by a $240 price target. Should the figure be met, investors will be pocketing returns of 33% a year from now. (To watch Pajjuri’s track record, click here)

Nvidia gets strong support elsewhere on the Street; with an additional 38 Buys trumping 1 Hold and Sell, each, the stock claims a Strong Buy consensus rating. The forecast calls for 12-month returns of ~46%, considering the average target stands at $263.44. (See NVDA stock forecast)

AMD

Next up, AMD, a chipmaker staking a claim as Nvidia’s biggest challenger in the GPU space. That’s not to say the company is about to overhaul Nvidia as the leading AI chip supplier, but even closing the gap a little and boosting its share should drive plenty of gains. To wit, CEO Lisa Su is targeting a double-digit share of the data center AI chip industry.

That’s not just a fanciful notion given AMD/Su’s pedigree – it’s not the first time AMD has faced the challenge of trying to catch up to a bigger rival. It was once seen as lagging far behind Intel in the CPU market, but AMD has steadily gained market share, fueled by strong demand for its Ryzen desktop processors and EPYC server chips, while also capitalizing on missteps by Intel.

That said, Intel’s problems in recent years have been well-documented and there’s none of that going on at Nvidia. So, how does AMD plan on siphoning away share? Naturally, by bringing to market a product that can compete with the best. While until recently the perceived wisdom was that AMD lacked such an offering, that is all about to change.

Having already improved its positioning last year via deals with industry leaders like OpenAI and Oracle, AMD is preparing to launch a high-performance product. The company has unveiled Helios, its newest AI compute rack, built to deliver massive processing power. Helios is set to compete directly with Nvidia’s NVL systems, featuring 72 of AMD’s MI455X chips compared with the 72 Rubin GPUs in Nvidia’s NVL72. Shipments of the Helios rack are expected to begin in the fourth quarter of this year.

For RBC’s Pajjuri, there’s no doubt AMD is moving in the right direction. However, the analyst refrains from fully getting behind this chipmaker right now. Explaining why, Pajjuri writes, “After a slow start in the AI GPU market, AMD is making solid progress with design wins across most major US hyperscalers for its MI3xx series accelerators. We think its recent partnership with OpenAI offers significant growth potential and could unlock ~$20 EPS power by 2030 despite the equity dilution, positioning AMD as a credible alternative to NVIDIA and potentially accelerating adoption cycles. Key risks include roadmap execution, especially at rack-scale level where system integration complexity remains high, along with growing competition from in-house ASICs… We prefer to wait for a better entry as we see limited immediate catalysts until MI450 product ramps in 4Q26.”

Accordingly, Pajjuri initiated coverage of AMD with a Sector Perform (i.e., Neutral) rating, backed by a $230 price target, suggesting the stock is fully valued at the moment.

7 other analysts are also currently on the AMD fence, but with an additional 24 Buys, the analyst consensus rates the stock a Strong Buy. The forecast calls for 12-month returns of 19%, considering the average target clocks in at $284.07. (See AMD stock forecast)

Qualcomm

Last on Pajjuri’s list of AI chip stocks, we have Qualcomm, a leading semiconductor and telecommunications company best known for its mobile chipsets and wireless technologies. It designs and licenses processors, modems, and SoC (system-on-chip) solutions that power smartphones, tablets, and other connected devices, with its Snapdragon line being particularly prominent.

Beyond consumer electronics, Qualcomm plays a big role in enabling 4G, 5G, and emerging 6G connectivity, providing both the hardware and intellectual property necessary for modern wireless networks. The company also generates significant revenue through licensing its patents to device manufacturers, giving it a strong recurring income stream.

More recently, Qualcomm has been making growing efforts to gain a footing in the AI game. In December, the company finalized its $2.4 billion acquisition of Alphawave Semi, a specialist in high-speed connectivity IP, with the goal of enhancing its data center and AI compute capabilities by combining Alphawave’s chiplet and connectivity tech with Qualcomm’s Oryon CPUs and Hexagon NPUs.

Earlier, in October, Qualcomm unveiled its entry into the AI data center market with the launch of its AI200 and AI250 AI accelerators. These chips are built for high-performance AI inference, aiming to compete with Nvidia and AMD by focusing on power efficiency, reduced total cost of ownership, and architectures tailored for large-scale, rack-level deployments.

So far, these announcements have failed to excite investors, with the shares still down over the past 12 months. It remains to be seen whether these moves will help Qualcomm become an AI chip leader, although for now Pajjuri keeps a skeptical stance. “QCOM stock underperformed the SOX index over the past year, in our view due to sluggish smartphone growth, modem in-sourcing at Apple, and a lack of a compelling data center AI narrative,” Pajjuri opined.

“We expect muted revenue growth for the next 2 years as share shifts at Apple (and Samsung) largely offset solid growth in Auto, XR, and IoT markets. While we are encouraged by the recent AI accelerator product announcement, meaningful revenue contribution could take time, especially given QCOM’s size. At 14x CY26E P/E, valuation looks reasonable and cash returns are solid. We initiate at Sector Perform as we await evidence of Data Center progress,” the analyst summed up.

That Sector Perform (i.e., Neutral) rating is backed by a $180 price target. Still, that figure points toward 12-month returns of 15%.

Overall, QCOM stock claims a Moderate Buy consensus rating, based on a mix of 10 Buys, 6 Holds and 1 Sell. At $196, the average price target makes room for share appreciation of ~26% over the one-year timeframe. (See QCOM stock forecast)

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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.