The second method is what everyone writes down on a bit of scrap paper. Students often write it down as a proof as well, and often forget that a double-arrow is needed, which leads to proofs like this:
To prove $2 = 1$:
$2 = 1$
hence
$1 = 2$ as well.
Add these to get $3 = 3$, which is true.
so we're done and it's true!
That pattern has led to a general disdain for such proofs, even when they're valid (like yours, aside from the unnecessary initial "If".). It helps the reader a lot if you start with a preliminary declaration that you're going to prove equivalence to some known thing, so I'd write your proof like this:
I'll show that AM-GM is logically equivalent to the true statement $(\sqrt{x} - \sqrt{y})^2 \ge 0$ for any real numbers $x,y$ $u$, through a sequence of equivalences.
\begin{align} \dfrac{x + y}2 &≥ \sqrt {xy} && \text{equivalent, by
multiplying/dividing by $2$, to}\\
x + y &≥ 2\sqrt{xy}&&
\text{equivalent, by subtracting/adding $2\sqrt{xy}$ from both sides,
to}\\
x - 2\sqrt{xy} + y & >= 0 && \text{equivalent, by factoring/expanding, to}\\ (\sqrt x - \sqrt y)^2 &≥ 0
\end{align}
Because this final statement is true for all nonnegative $x,y$, so is
the AM-GM inequality.
But by the time you add all that stuff, including the reason for each double-implication, it's actually harder to read than the "first form" proof. Furthermore, it's generally interesting to prove equivalence between two familiar things, but the second thing, in this case, isn't nearly as interesting in its own right as AM-GM. So a proof that goes from "known but not particularly inspiring basic thing" to "new and widely-useful statement" will make more sense to your reader.