Any of our readers who were around for the incredible bull years of 2018 and 2019, and indeed through much of the pandemic rally, will remember the epic runs of both NVIDIA Corp (NASDAQ: NVDA) and Advanced Micro Devices (NASDAQ: AMD). As the longer-term opportunity in the semiconductor space became more and more appreciated, shares of these two leading chip makers became accustomed to delivering annual gains in the triple-digit percentage range, and investors loved it.

Sure, 2022 was a challenging year for many reasons, but since January, there's once again been a fire under their respective stocks that's only getting hotter. 

NVIDIA, the larger of the two with a recently acquired $1 trillion market cap, can boast of a 190% gain since the start of the year, with much of that coming since the end of last month; more on that later. AMD's 80% gain over the same time pales in comparison but still puts it well ahead of the broader market.

The benchmark S&P 500 index for context is up 14% since January. But for investors looking at both and trying to decide which to choose, the choice mightn't be as clear-cut as they might like. Both have pros and cons; let's look at some of them here. 

NVIDIA 

This is the stock that everyone is talking about right now. Since their Q1 results shocked Wall Street with a massive AI fuelled jump in forward guidance, analysts have been talking about this being the start of the 4th Industrial Revolution and one they see NVIDIA being at the forefront of. Having already had a strong start to the year, NVIDIA's shares are up more than 50% in the past two months alone. This move means they're back at all-time highs and in that rare club of stocks with a $1 trillion market cap. 

It's also boosted their price-to-earnings (PE) ratio, a widely used measure of how cheap or expensive a stock is. At 220 now, NVIDIA's feels a little bubbly, especially when compared to, say, Apple Inc's (NASDAQ: AAPL) 31 or Meta Platforms Inc's (NASDAQ: META) 35. Does this mean, though, that you've missed the boat? 

Not according to Morgan Stanley, who just named NVIDIA their top pick for 2023 while boosting their price target on NVIDIA stock to $500. From where shares closed last week, that points to an additional upside of almost 20%. And what's really interesting is that it's AMD that's just been dislodged from that number-one spot, thus making NVIDIA a compelling option as the out-and-out stronger choice. 

Advanced Micro Devices

But that's not to say you should steer clear of AMD at all costs. Indeed, they, too, have just had their price target increased by the team over at Wells Fargo. And at $150, it represents an even greater upside than what Morgan Stanley expects from NVIDIA. 

There's also the underdog or catch-up play, an element with AMD. Yes, they've been in NVIDIA's shadow this year, but since 2018 they've easily outperformed their larger competitor. Indeed, in many ways, the AMD bulls could argue that we're finally seeing NVIDIA play catch up here. But still, there's no doubt they're currently in second position, and investors will be looking to see some solid updates and action from AMD's leadership to ensure the gap doesn't widen further. 

Getting Involved

Both stocks have been and will continue to remain highly correlated, and there's an argument to be made that you probably can't go wrong with either. NVIDIA does seem to have more going for it, though, on a straight shoot-out. Consider that even with their recent runup, their PE ratio of 220 still compares favorably to AMD's 500. It will take a serious earnings report from the latter to bring that back in line, and until then, the safer play is NVIDIA, while those with a greater appetite for risk will prefer AMD.