AMD and Nvidia Just Experienced an Unprecedented Valuation Split

When two companies competing in the same industry have similar operating profiles, they tend to be priced about the same in terms of valuation. The market is full of examples like this: PepsiCo and Coca-Cola, Home Depot and Lowe's, Nvidia (NASDAQ: NVDA) and AMD (NASDAQ: AMD). However, the latter has experienced an unprecedented valuation split, and investors need to be aware of it.

Typically, there's one company that's more dominant than the other, and that company usually has a premium valuation. This is true for the stocks mentioned above, except for AMD and Nvidia. Despite Nvidia having a larger market share and growing faster than its peer, AMD is the more expensive stock. This is not a normal situation, and investors should be aware of it, as it should shape which of the stocks investors have higher exposure to.

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