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Compare Nvidia and AMD by calculating each multiple from the same share-price date and comparable accounting periods, then read the ratios alongside growth, margins, dilution, capital spending and working-capital movements. A lower P/E, price-to-sales ratio or cash-flow multiple is not automatically the cheaper stock economically; it may reflect slower growth, lower margins, weaker cash conversion or greater business risk.
What a valid Nvidia-versus-AMD valuation comparison requires
A valuation multiple is only meaningful when its numerator and denominator describe the same economic moment. Record the closing share price (or market capitalization) for both companies on one date. Then select one accounting basis—such as trailing twelve months (TTM), a clearly labeled fiscal year, or consensus forward estimates—and use it consistently for Nvidia (NVIDIA Corporation) and AMD (Advanced Micro Devices, Inc.).
The two companies do not use identical fiscal calendars. Nvidia’s fiscal 2026 ended January 25, 2026, while AMD’s fiscal 2025 ended December 27, 2025. Their latest reported second quarters also ended on different dates: Nvidia’s fiscal Q2 2027 ended July 26, 2026, and AMD’s fiscal Q2 2026 ended June 27, 2026. Treating those labels as if they were the same period can create a false comparison.
- Numerator: market capitalization or share price measured on a stated date.
- Denominator: revenue, net income, diluted EPS, operating cash flow or free cash flow for a stated period.
- Accounting basis: GAAP for both companies, or the same explicitly defined adjusted basis for both.
- Period label: TTM, reported fiscal year, or forward estimate. Never leave this unstated.
If you cannot align the price date and denominator period, describe the ratios as illustrative rather than as a current, like-for-like valuation.
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How do you calculate each valuation multiple?
Price-to-earnings (P/E)
For a per-share calculation, divide the share price by diluted earnings per share for the same period:
P/E = share price ÷ diluted EPS
At the company level, divide equity market capitalization by net income attributable to common shareholders:
P/E = market capitalization ÷ net income
The two approaches should be directionally consistent when the share count, period and definition of earnings align. Diluted EPS incorporates potentially dilutive securities; using basic EPS for one company and diluted EPS for the other can distort the result.
Choose GAAP or adjusted earnings before calculating. Nvidia’s fiscal 2026 diluted EPS was $4.90 on a GAAP basis as reported in its annual report. AMD’s fiscal Q2 2026 presentation reports both GAAP and non-GAAP results; use its GAAP diluted EPS of $1.38 as the baseline for a like-for-like comparison. If you also show an adjusted P/E, identify every adjustment and apply the same type of definition to both companies. Do not divide a GAAP share price by one company’s non-GAAP EPS while using GAAP EPS for the other.
P/E becomes difficult to interpret when earnings are negative, temporarily depressed, or unusually inflated by a one-time item. In those cases, use the ratio as a limited observation and give greater weight to revenue, margins and cash-flow analysis.
Price-to-sales (P/S)
P/S compares the value of the equity with the revenue produced during the selected period:
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P/S = market capitalization ÷ revenue
Revenue is less affected by operating expenses, interest, taxes and accounting charges than net income. That makes P/S useful when profits are volatile or when companies are at different stages of a product cycle. Its limitation is equally important: P/S says nothing directly about how much of each sales dollar becomes profit or cash. A company with a high P/S must eventually demonstrate margins and cash generation that support the market’s expectations.
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State the convention explicitly, then divide market capitalization by cash generated from operating activities:
Price-to-operating-cash-flow = market capitalization ÷ operating cash flow
Use the cash-flow statement’s operating-cash-flow total for the same TTM or fiscal-year period. Working-capital movements—especially inventory, receivables and payables—can make one period’s operating cash flow unusually high or low, so inspect the underlying changes rather than treating the ratio as a permanent run rate.
Price-to-free-cash-flow
A common equity free-cash-flow convention is operating cash flow minus capital expenditures:
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Then calculate:
Price-to-free-cash-flow = market capitalization ÷ free cash flow
Companies and data services sometimes define free cash flow differently—for example, by including or excluding certain investments, finance leases or acquisitions. Put the definition and the capital-expenditure line used in your worksheet next to the resulting multiple. If free cash flow is negative, the ratio is not useful as a conventional positive valuation multiple; explain the negative amount instead.
Step 1: Choose a common price date and collect share data
- Pick one trading date. Use the same closing date for Nvidia and AMD and record the date in your worksheet. A price from one day combined with a market capitalization from another can introduce a material mismatch.
- Capture the closing price. Record whether the quote is split-adjusted and whether it is a regular-session close rather than an intraday value.
- Determine market capitalization. Multiply the price by the appropriate shares outstanding for that date. If you use a reported market-capitalization figure instead, record its timestamp and source.
- Check dilution. For the per-share P/E method, use diluted weighted-average shares embedded in diluted EPS. For an equity-level method, ensure the share count used to build market capitalization is compatible with the net-income denominator.
Do not claim an exact “current Nvidia P/E” or “current AMD P/S” without stating both the price retrieval date and denominator period. No synchronized October 13, 2026 market-price snapshot and fully matched TTM denominators are established here, so exact live multiples must be calculated from freshly retrieved prices and filings.
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Step 2: Select TTM, fiscal-year or forward denominators
TTM comparison
TTM adds the latest four reported quarters for each company. This generally reflects current operations better than an old fiscal year, but the quarter-end dates will still differ. For the latest available filings, Nvidia’s four-quarter set would end with the quarter ended July 26, 2026, while AMD’s would end with the quarter ended June 27, 2026. Label those dates and acknowledge that the windows are not identical.
Build TTM revenue, net income, diluted EPS and operating cash flow by adding the four quarterly values. For cash flow, use the cumulative cash-flow statements carefully: subtract the prior-year cumulative amount from the current cumulative amount when a filing reports year-to-date figures, rather than adding overlapping six-month totals.
Reported fiscal-year comparison
Annual figures are easy to audit but cover different dates in this case. Nvidia reported fiscal 2026 revenue of $215.9 billion and diluted EPS of $4.90 for the year ended January 25, 2026. AMD reported fiscal 2025 revenue of $34.6 billion and operating cash flow from continuing operations of $6.5 billion for the year ended December 27, 2025. Use those numbers only with their exact fiscal-year labels; they are not a synchronized calendar-year comparison.
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Forward P/E
Forward P/E divides today’s price by an earnings estimate for a future period. It can reflect expected growth sooner than TTM P/E, but the denominator is an estimate rather than a reported result. Record the estimate provider, publication date, fiscal period and whether the estimate is GAAP or adjusted. Use the same methodology for both companies and update the ratio when estimates change. A forward multiple should never be presented as if it were a historical fact.
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The figures below are reported company figures for the periods shown. They are inputs for a reproducible worksheet, not matched-period valuation multiples.
| Company and period | Revenue | Net income | Diluted EPS | Cash-flow information |
|---|---|---|---|---|
| Nvidia fiscal 2026, year ended January 25, 2026 | $215.9 billion | Not stated in the cited annual figure set | $4.90 | Not stated in the cited annual figure set |
| AMD fiscal 2025, year ended December 27, 2025 | $34.6 billion | Not stated in the cited annual figure set | Not stated in the cited annual figure set | $6.5 billion operating cash flow from continuing operations |
| Nvidia fiscal Q2 2027, quarter ended July 26, 2026 | $96.2 billion | $59.7 billion | $2.46 | Quarterly cash-flow figures require the filing’s cash-flow statement; this quarter is not a TTM denominator |
| AMD fiscal Q2 2026, quarter ended June 27, 2026 | $11.536 billion | $2.297 billion | $1.38 GAAP | $5.3 billion operating cash flow for the first six months of fiscal 2026 |
Nvidia’s annual report describes the fiscal 2026 result this way: “Fiscal 2026 marked another year of strong growth for NVIDIA, with revenue surging 65% year on year to $215.9 billion reflecting continued momentum across our platform transitions to accelerated computing and AI.” The statement is from NVIDIA Corporation’s fiscal 2026 annual report.
Nvidia’s fiscal Q2 2027 and AMD’s fiscal Q2 2026 numbers should not be divided directly to create a “quarterly P/E comparison.” They end nearly a month apart and belong to different fiscal-year labels. Assemble each company’s TTM denominator or use clearly labeled annual periods first.
How do you compare growth without overstating it?
Start with the base period
Nvidia’s fiscal 2026 revenue increased 65% year over year. AMD’s latest data-center revenue was $6.7 billion in fiscal Q2 2026, up 107% year over year. Those percentages describe different businesses, periods and bases, so they cannot by themselves establish which stock deserves a higher multiple.
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Connect growth to margins
P/S is most informative when paired with gross and operating margins. Two companies can post the same revenue growth while producing very different earnings because of pricing, product mix, manufacturing costs, research spending and stock-based compensation. A high P/S may be defensible if incremental sales carry durable margins; it is harder to justify when growth requires heavy spending or produces little operating cash.
Test cash conversion
Compare operating cash flow with net income and then compare free cash flow with operating cash flow. Persistent conversion of accounting earnings into cash supports a stronger-quality earnings case. A temporary gap may reflect inventory purchases ahead of demand, receivables timing, supplier terms or other working-capital changes rather than a permanent deterioration—but the reason must be identified.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.How do you compare cash flow between Nvidia and AMD?
- Use the same period. Obtain each company’s four most recent quarters or the same clearly labeled fiscal-year basis.
- Extract operating cash flow. Use “net cash provided by operating activities” or the equivalent line, and note whether it includes discontinued operations.
- Explain working capital. Review changes in inventory, accounts receivable, accounts payable and other operating assets and liabilities.
- Calculate free cash flow consistently. Subtract capital expenditures from operating cash flow using the same treatment for both companies.
- Divide market capitalization by the selected cash-flow measure. Label the result as price-to-operating-cash-flow or price-to-free-cash-flow, not simply “cash-flow multiple.”
AMD’s fiscal 2025 filing specifically discusses cash outflows from changes in operating assets and liabilities, including inventory buildup. That is why its $6.5 billion annual operating-cash-flow figure should be examined for timing effects before being used as a normalized denominator. AMD’s $5.3 billion operating cash flow for the first six months of fiscal 2026 is a year-to-date amount, not a full-year figure; do not compare it directly with Nvidia’s annual cash flow.
How should you interpret a lower or higher multiple?
| Observation | Questions to ask before drawing a conclusion |
|---|---|
| Lower P/E | Are earnings temporarily high, or is growth expected to slow? Are margins sustainable? Are one-time gains or charges affecting net income? |
| Higher P/E | What growth, product transitions and margin durability are already priced in? What happens if demand or pricing normalizes? |
| Lower P/S | Are margins structurally lower, or is the market underestimating a credible path to improvement? Does revenue convert into cash? |
| Higher P/S | Can the company maintain growth while funding research, capacity and customer support? Is the multiple supported by operating leverage? |
| Lower cash-flow multiple | Is cash flow depressed by a temporary investment or working-capital build, or does it reveal weak earnings quality? |
| Higher cash-flow multiple | Is cash generation durable after capital expenditures, or is the period unusually favorable because of collections or reduced investment? |
Market multiples embed expectations about future growth, margins, capital intensity, competition, customer concentration, export controls, supply constraints and the durability of data-center demand. They are lenses, not intrinsic-value calculations. A ratio ranking without this operating context is not a valuation conclusion.
Accounting and comparability traps to avoid
- Mixed dates: Pairing a current share price with an old annual denominator can make a multiple look artificially high or low.
- Mixed earnings definitions: GAAP EPS and non-GAAP EPS are not interchangeable. Keep the basis consistent and disclose adjustments.
- Overlapping cash-flow periods: Adding year-to-date cash-flow totals without subtracting the prior cumulative period double-counts earlier quarters.
- Working-capital distortions: Inventory purchases and collection timing can move operating cash flow sharply in one period.
- Share-count mismatch: Market capitalization based on current shares and EPS based on a different weighted-average share count can produce divergent per-share and equity-level P/E results.
- Unusual charges: A charge in the comparison year can make subsequent growth appear unusually fast. AMD’s disclosed MI308-related prior-year inventory and related charges are an example.
- Corrected filings: AMD’s 2025 annual report was amended to correct transposed client-unit-shipment and average-selling-price growth disclosures. Use the amended filing for those client metrics.
- Negative denominators: A negative earnings or free-cash-flow denominator makes a conventional positive multiple misleading. Report the negative result and switch to an appropriate supplemental measure.
A practical worksheet you can reproduce
Create one row for Nvidia and one for AMD, with columns for:
- Price date and closing share price
- Shares outstanding date and market capitalization
- Denominator period and exact quarter-end or fiscal-year date
- GAAP revenue, net income and diluted EPS
- Operating cash flow
- Capital expenditures and the resulting free cash flow
- P/E, P/S, price-to-operating-cash-flow and price-to-free-cash-flow
- Growth rate, operating margin, cash conversion and notable one-time items
Use formulas such as:
Market cap = closing price × shares outstandingTTM revenue = Q1 + Q2 + Q3 + Q4 revenueTTM net income = Q1 + Q2 + Q3 + Q4 net incomeTTM operating cash flow = latest four quarterly operating-cash-flow amountsTTM free cash flow = TTM operating cash flow − TTM capital expendituresP/E = market cap ÷ TTM net incomeP/S = market cap ÷ TTM revenuePrice-to-operating-cash-flow = market cap ÷ TTM operating cash flowPrice-to-free-cash-flow = market cap ÷ TTM free cash flow
Save the filing date, page or statement line used for every denominator. If another reader cannot reconstruct your number from those inputs, the comparison is not auditable.
Should you use trailing or forward P/E?
Use TTM P/E when you want a ratio anchored to reported results and can accept that the latest four quarters may include a fading or unusually strong cycle. Use forward P/E when future earnings are central to the question and reliable, consistently defined estimates are available. Present both only when their bases are clearly separated: TTM is historical, while forward P/E depends on assumptions that can change.
For Nvidia and AMD, a sensible presentation is to show the TTM GAAP P/E, then a separately labeled forward GAAP or adjusted P/E with the estimate date and fiscal year. Explain any divergence rather than selecting whichever ratio produces the more attractive narrative.
A decision framework for the final comparison
- Verify alignment. Confirm one price date, one denominator convention and exact period-end dates.
- Calculate all three lenses. Use P/E for earnings, P/S for sales and a clearly defined operating- or free-cash-flow multiple for cash generation.
- Check operating economics. Compare growth, gross and operating margins, dilution, capital expenditure and cash conversion.
- Investigate anomalies. Read explanations for inventory, receivables, export-control effects, restructuring, stock compensation and other unusual items.
- Write a conditional conclusion. State what expectations each multiple appears to require and which assumptions would make the comparison change. Do not call one stock cheaper solely because one ratio is lower.
This process keeps Nvidia and AMD on comparable footing while recognizing that their fiscal calendars, product mixes and earnings quality can differ. The result is a transparent valuation comparison rather than a mechanical ranking.
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