You size motor conductors considering both the continuous load multiplied by 1.25 AND the conditions of use (ambient temperature correction and conduit fill derating, if applicable). It's an "AND" situation, not an "OR".Here's the breakdown:1. Calculate the continuous load requirement

As per NEC 430.22, the motor branch-circuit conductors must have an ampacity of not less than 125% of the motor's full-load current rating (FLA), as listed in Tables 430.247, 430.248, 430.249, and 430.
250. This addresses continuous load situations as referenced in 215.2(A)(1). So, multiply the motor FLA by 1.25 (or the appropriate percentage if other rules apply).
2.

Calculate the derated ampacity due to conditions of use

Determine the ampacity correction factors for ambient temperature and the ampacity adjustment factors for the number of current-carrying conductors in a raceway or cable. 310.15 and its associated tables are relevant.
3.

Select the conductor

Choose a conductor size that has an ampacity (from Table 310.16 or the appropriate table for your wiring method) after applying the derating factors from step 2, that is

equal to or greater than the value calculated in step 1.

In short

You must account for the 125% of the continuous load. You must account for derating due to ambient temperature and conduit fill (conditions of use).You must satisfy

both conditions when selecting your conductor size. If derating significantly reduces your conductor's ampacity, you'll need to upsize to a larger conductor to meet the 125% FLA requirement. Flag for review