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NVIDIA vs. Broadcom: Which AI Semiconductor Stock Offers More Upside?
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Key Takeaways
NVIDIA's data center revenues surged 73% to $39.1B in Q1 FY26, led by strong AI GPU demand.
Export restrictions cost NVIDIA $2.5B in lost China sales, pressuring near-term growth.
Broadcom projects Q3 FY25 AI revenues of $5.1B, up 60% year over year, with total sales up 21%.
NVIDIA Corporation (NVDA - Free Report) and Broadcom Inc. (AVGO - Free Report) are two of the most important semiconductor companies powering the artificial intelligence (AI) revolution. NVDA designs the powerful graphics processing units (GPUs) that run advanced AI models. At the same time, Broadcom plays a key role with networking chips and custom ASICs (Application-Specific Integrated Circuit) that make hyperscale data centers more efficient.
Both stocks have surged in recent years as AI adoption accelerates. Year to date, shares of NVIDIA and Broadcom have soared 35.5% and 31.9%, respectively.
YTD Price Return Performance
Image Source: Zacks Investment Research
So, the question for investors now is which of the two offers more upside in the current market. Let’s break it down by looking at their financial performance, challenges and growth outlook.
NVIDIA: Unmatched AI Scale but Geopolitical Risks Loom
NVIDIA is at the center of AI computing, with its products widely used across data centers, gaming and autonomous vehicles. The company continues to see strong demand from cloud providers, enterprises and startups building AI systems. In the first quarter of fiscal 2026, NVIDIA’s data center revenues rose 73% year over year to $39.1 billion, showing the strength of this part of its business.
Its newer Hopper 200 and Blackwell GPU platforms are being adopted quickly as customers work to grow their AI infrastructure. Much of this demand comes from large cloud providers that depend on NVIDIA GPUs for their AI workloads. The Blackwell architecture promises significantly higher performance, and upcoming versions like Blackwell Ultra and Vera Rubin are expected to strengthen NVIDIA’s position further as AI demand keeps growing.
However, the company faces near-term challenges from export restrictions to China. These restrictions have been significantly hurting NVIDIA’s data center chip sales in China. During the first-quarter fiscal 2026 earnings call, the company revealed that it lost $2.5 billion in H20 chip sales in China during the quarter. It further expects to miss $8 billion in H20 sales during the second quarter.
These restrictions are already slowing NVIDIA’s growth. The company’s revenue forecast for the second quarter is $45 billion, implying a modest 2% sequential increase, well below the double-digit growth it posted in the previous nine quarters. While NVIDIA’s long-term prospects are still strong, near-term uncertainty has increased.
Nonetheless, in a significant development earlier in August, NVIDIA received approval to sell its H20 chips in China after signing a deal with the U.S. government. Under the terms of the agreement, NVIDIA will pay 15% of total revenues from H20 sales in China to the U.S. government. While the deal opens a valuable door to one of the largest AI markets globally, this revenue-sharing condition may slightly impact margins.
Broadcom: Strong Demand for XPUs Aids Prospects
Broadcom has established itself as a critical player in the AI ecosystem. The company supplies networking chips and custom ASICs that allow hyperscale data centers to handle the enormous data traffic generated by AI workloads.
The company is benefiting from strong demand for its networking products and custom AI accelerators (XPUs). XPUs are a type of ASICs, which are necessary to train Gen AI models. They require complex integration of compute, memory and I/O capabilities to achieve the necessary performance at lower power consumption and cost.
AVGO’s next-generation 3-nanometer XPUs are the first of their kind to market in that process node. Broadcom is on track for volume shipment to hyperscale customers in the second half of fiscal 2025. AVGO is now planning to develop the industry’s first 2-nanometer AI XPU packaging 3.5D and targets scaling clusters of 500,000 accelerators for hyperscale customers.
The company believes that by 2027, each of its three hyperscalers plans to deploy 1 million XPU clusters across a single fabric. The Serviceable Addressable Market for XPUs and networks is expected between $60 billion and $90 billion in fiscal 2027 alone. Broadcom’s rich partner base, including NVIDIA, Arista Networks, DELL, Juniper and Supermicro, has been a key catalyst.
The company is executing well financially. In the second quarter of fiscal 2025, Broadcom’s AI-related revenues jumped 46% year over year to $4.4 billion, while Semiconductor revenues surged 17% year over year to $8.4 billion. For the third quarter, the company expects AI-related revenues to increase 60% year over year to $5.1 billion and Semiconductor sales to soar 25% to $9.1 billion. Total revenues are forecasted to rise 21% to $15.8 billion.
NVDA vs. AVGO: Earnings Estimate Trend
The Zacks Consensus Estimate for NVIDIA’s fiscal 2026 earnings is pegged at $4.26 per share, unchanged over the past 30 days, indicating a 42.5% increase over fiscal 2025’s reported figure.
NVIDIA Corporation Price, Consensus and EPS Surprise
However, the consensus mark for Broadcom’s fiscal 2025 earnings has declined by a penny to $6.63 per share over the past 30 days, suggesting 36.1% growth over fiscal 2024.
Nonetheless, Broadcom has a consistency in surpassing earnings estimates, beating the Zacks Consensus Estimate in each of the trailing four quarters. On the other hand, NVIDIA’s earnings surpassed thrice in the trailing four quarters while missing on one occasion.
Valuation: NVDA Is Cheaper Than AVGO
Both NVIDIA and Broadcom are overvalued, as suggested by the Zacks Value Score. While NVDA holds a Value Score of D, AVGO has an F score.
In terms of forward 12-month Price/Earnings, NVIDIA shares are trading at 36.26X, lower than AVGO’s 38.46X.
Forward 12-Month P/E Comparison
Image Source: Zacks Investment Research
At first glance, NVIDIA looks like the better deal. However, Broadcom’s premium reflects its diversified business model and steadier earnings profile. NVIDIA’s earnings are currently more exposed to regulatory changes and competition from custom chips developed by large cloud players. Broadcom, by contrast, spreads its growth across multiple segments while still benefiting from the AI surge.
Final Thoughts: AVGO Is a Better Buy Right Now
Both NVIDIA and Broadcom are positioned to gain from AI, but the risk-reward balance looks more attractive for Broadcom. NVIDIA’s leadership in GPUs is undeniable, yet export restrictions, margin pressures and slower growth momentum raise concerns. Meanwhile, Broadcom offers investors exposure to AI demand while maintaining a diversified business model. Given these factors, Broadcom stands out as the better investment option right now.
Image: Bigstock
NVIDIA vs. Broadcom: Which AI Semiconductor Stock Offers More Upside?
Key Takeaways
NVIDIA Corporation (NVDA - Free Report) and Broadcom Inc. (AVGO - Free Report) are two of the most important semiconductor companies powering the artificial intelligence (AI) revolution. NVDA designs the powerful graphics processing units (GPUs) that run advanced AI models. At the same time, Broadcom plays a key role with networking chips and custom ASICs (Application-Specific Integrated Circuit) that make hyperscale data centers more efficient.
Both stocks have surged in recent years as AI adoption accelerates. Year to date, shares of NVIDIA and Broadcom have soared 35.5% and 31.9%, respectively.
YTD Price Return Performance
Image Source: Zacks Investment Research
So, the question for investors now is which of the two offers more upside in the current market. Let’s break it down by looking at their financial performance, challenges and growth outlook.
NVIDIA: Unmatched AI Scale but Geopolitical Risks Loom
NVIDIA is at the center of AI computing, with its products widely used across data centers, gaming and autonomous vehicles. The company continues to see strong demand from cloud providers, enterprises and startups building AI systems. In the first quarter of fiscal 2026, NVIDIA’s data center revenues rose 73% year over year to $39.1 billion, showing the strength of this part of its business.
Its newer Hopper 200 and Blackwell GPU platforms are being adopted quickly as customers work to grow their AI infrastructure. Much of this demand comes from large cloud providers that depend on NVIDIA GPUs for their AI workloads. The Blackwell architecture promises significantly higher performance, and upcoming versions like Blackwell Ultra and Vera Rubin are expected to strengthen NVIDIA’s position further as AI demand keeps growing.
However, the company faces near-term challenges from export restrictions to China. These restrictions have been significantly hurting NVIDIA’s data center chip sales in China. During the first-quarter fiscal 2026 earnings call, the company revealed that it lost $2.5 billion in H20 chip sales in China during the quarter. It further expects to miss $8 billion in H20 sales during the second quarter.
These restrictions are already slowing NVIDIA’s growth. The company’s revenue forecast for the second quarter is $45 billion, implying a modest 2% sequential increase, well below the double-digit growth it posted in the previous nine quarters. While NVIDIA’s long-term prospects are still strong, near-term uncertainty has increased.
Nonetheless, in a significant development earlier in August, NVIDIA received approval to sell its H20 chips in China after signing a deal with the U.S. government. Under the terms of the agreement, NVIDIA will pay 15% of total revenues from H20 sales in China to the U.S. government. While the deal opens a valuable door to one of the largest AI markets globally, this revenue-sharing condition may slightly impact margins.
Broadcom: Strong Demand for XPUs Aids Prospects
Broadcom has established itself as a critical player in the AI ecosystem. The company supplies networking chips and custom ASICs that allow hyperscale data centers to handle the enormous data traffic generated by AI workloads.
The company is benefiting from strong demand for its networking products and custom AI accelerators (XPUs). XPUs are a type of ASICs, which are necessary to train Gen AI models. They require complex integration of compute, memory and I/O capabilities to achieve the necessary performance at lower power consumption and cost.
AVGO’s next-generation 3-nanometer XPUs are the first of their kind to market in that process node. Broadcom is on track for volume shipment to hyperscale customers in the second half of fiscal 2025. AVGO is now planning to develop the industry’s first 2-nanometer AI XPU packaging 3.5D and targets scaling clusters of 500,000 accelerators for hyperscale customers.
The company believes that by 2027, each of its three hyperscalers plans to deploy 1 million XPU clusters across a single fabric. The Serviceable Addressable Market for XPUs and networks is expected between $60 billion and $90 billion in fiscal 2027 alone. Broadcom’s rich partner base, including NVIDIA, Arista Networks, DELL, Juniper and Supermicro, has been a key catalyst.
The company is executing well financially. In the second quarter of fiscal 2025, Broadcom’s AI-related revenues jumped 46% year over year to $4.4 billion, while Semiconductor revenues surged 17% year over year to $8.4 billion. For the third quarter, the company expects AI-related revenues to increase 60% year over year to $5.1 billion and Semiconductor sales to soar 25% to $9.1 billion. Total revenues are forecasted to rise 21% to $15.8 billion.
NVDA vs. AVGO: Earnings Estimate Trend
The Zacks Consensus Estimate for NVIDIA’s fiscal 2026 earnings is pegged at $4.26 per share, unchanged over the past 30 days, indicating a 42.5% increase over fiscal 2025’s reported figure.
NVIDIA Corporation Price, Consensus and EPS Surprise
NVIDIA Corporation price-consensus-eps-surprise-chart | NVIDIA Corporation Quote
However, the consensus mark for Broadcom’s fiscal 2025 earnings has declined by a penny to $6.63 per share over the past 30 days, suggesting 36.1% growth over fiscal 2024.
Broadcom Inc. Price, Consensus and EPS Surprise
Broadcom Inc. price-consensus-eps-surprise-chart | Broadcom Inc. Quote
Nonetheless, Broadcom has a consistency in surpassing earnings estimates, beating the Zacks Consensus Estimate in each of the trailing four quarters. On the other hand, NVIDIA’s earnings surpassed thrice in the trailing four quarters while missing on one occasion.
Valuation: NVDA Is Cheaper Than AVGO
Both NVIDIA and Broadcom are overvalued, as suggested by the Zacks Value Score. While NVDA holds a Value Score of D, AVGO has an F score.
In terms of forward 12-month Price/Earnings, NVIDIA shares are trading at 36.26X, lower than AVGO’s 38.46X.
Forward 12-Month P/E Comparison
Image Source: Zacks Investment Research
At first glance, NVIDIA looks like the better deal. However, Broadcom’s premium reflects its diversified business model and steadier earnings profile. NVIDIA’s earnings are currently more exposed to regulatory changes and competition from custom chips developed by large cloud players. Broadcom, by contrast, spreads its growth across multiple segments while still benefiting from the AI surge.
Final Thoughts: AVGO Is a Better Buy Right Now
Both NVIDIA and Broadcom are positioned to gain from AI, but the risk-reward balance looks more attractive for Broadcom. NVIDIA’s leadership in GPUs is undeniable, yet export restrictions, margin pressures and slower growth momentum raise concerns. Meanwhile, Broadcom offers investors exposure to AI demand while maintaining a diversified business model. Given these factors, Broadcom stands out as the better investment option right now.
Currently, Broadcom has a Zacks Rank #2 (Buy), making the stock a must-pick compared with NVIDIA, which has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.