We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
AMD vs. Broadcom: Which Semiconductor Stock is a Buy Right Now?
Read MoreHide Full Article
Key Takeaways
Broadcom benefits from surging AI demand, with XPU revenue up 140% and strong hyperscaler traction.
AVGO projects $22B Q2 revenues and $10.7B AI sales, signaling continued AI-driven growth momentum.
AMD expands AI portfolio and partnerships, but modest guidance and competition weigh on near-term outlook.
Advanced Micro Devices (AMD - Free Report) and Broadcom (AVGO - Free Report) are key providers of semiconductor chips that power artificial intelligence (AI). While AMD’s EPYC CPU and Instinct GPU power cloud, AI and high-performance computing, Broadcom’s focus is on enabling AI infrastructure through ASICs (custom chips) for hyperscalers, as well as switches, NICs, and interconnects. Both companies are benefiting from higher spending on AI infrastructure. Per CNBC, Alphabet, Meta Platforms, Amazon and Microsoft are expected to spend roughly $700 billion on developing AI infrastructure in 2026 on a combined basis.
So, AMD or Broadcom, which is a better buy in the current scenario? Let’s find out.
AMD’s Strong Portfolio, Rich Partner Base Key Catalyst
AMD outlined its “AI Everywhere, for Everyone” strategy at the CES 2026 with the introduction of Helios rack-scale platform, Instinct MI400 series lineup and Ryzen AI 400 and AI PRO 400 Series processors for AI PCs. AMD expects its data center AI revenues to see a CAGR of more than 80% over the next three to five years. Overall, data center business revenues are expected to see an annual growth rate of more than 60% over the next three to five years.
AMD’s data center AI business prospects are expected to accelerate with the upcoming MI450 series, which forms the crux of the 6-gigawatt (GWs) deal inked between AMD and Meta Platforms. Helios rack-scale architecture is gaining traction, as evident from AMD’s deals with OpenAI, Hewlett Packard Enterprise, Oracle and Lenovo. The launch of the MI500 series, powered by AMD’s CDNA 6 architecture built on advanced 2-nanometer process technology and featuring high-speed HBM4E memory, is expected to drive further growth.
However, AMD’s modest guidance for the first quarter of 2026 is expected to remain an overhang on near-term prospects. The company expects revenues of $9.8 billion (+/-$300 million), which at the mid-point indicates year-over-year growth of approximately 32% but a sequential decline of approximately 5%. AMD is facing stiff competition from the likes of Intel and NVIDIA. The Zacks Consensus Estimate for first-quarter 2026 revenues is pegged at $9.84 billion, suggesting 32.3% growth from the figure reported in the year-ago quarter.
Broadcom Rides on Strong Demand for XPUs
In the first quarter of fiscal 2026, Broadcom’s revenues from custom accelerators (XPUs) jumped 140% year over year. The company’s Semiconductor solutions revenues jumped 52% year over year to $12.52 billion. Semiconductor revenues accounted for 64.8% of net revenues in the reported quarter. The uptick in Semiconductor revenue was driven by the strong AI revenues, which surged 106% year over year. AI networking revenues grew 60% year over year and represented one-third of AI revenues.
The momentum is expected to continue in the current quarter, thanks to a clientele that includes Google, Meta Platforms and Anthropic. The company continues to gain market share in AI networking, driven by Tomahawk 6 switch, as well as Broadcom’s 200G SerDes, which are capturing demand from hyperscalers.
Broadcom expects a positive second-quarter fiscal 2026 performance, with AI revenues of $10.7 billion, suggesting a 140% year-over-year upsurge. AI networking is expected to accelerate in the second quarter of fiscal 2026 and grow to 40% of the total AI revenues. Semiconductor revenues are expected to be $14.8 billion, indicating 76% year-over-year growth. Broadcom expects revenues of $22 billion, indicating 47% year-over-year growth for the second quarter of fiscal 2026. The Zacks Consensus Estimate for revenues is currently pegged at $22.02 billion, suggesting 46.8% growth from the figure reported in the year-ago quarter.
Earnings Estimate Revision Positive for Both AVGO & AMD
The Zacks Consensus Estimate for AVGO’s fiscal 2026 earnings is pegged at $11.12 per share, up 10.6% over the past 30 days, indicating a 63.1% increase over fiscal 2025’s reported figure.
However, the consensus mark for AMD’s 2026 earnings has inched up by a penny to $6.61 per share over the past 30 days, suggesting 58.5% growth over 2025.
Year to date, AMD shares have dropped 6.9% compared with Broadcom’s fall of 8.7%.
AMD and AVGO Performance
Image Source: Zacks Investment Research
Valuation-wise, both AMD and Broadcom are overvalued, as suggested by the Value Score of D.
However, in terms of forward 12-month Price/Sales, AMD shares are trading at 6.7X, lower than AVGO’s 12.64X.
AMD and AVGO Valuation
Image Source: Zacks Investment Research
Conclusion
Broadcom’s expanding AI portfolio, along with a growing clientele, reflects solid top-line growth potential. AMD’s near-term prospects are modest, given the stiff competition from NVIDIA in the Data Center space.
View the Zacks #1 Rank List
Image: Bigstock
AMD vs. Broadcom: Which Semiconductor Stock is a Buy Right Now?
Key Takeaways
Advanced Micro Devices (AMD - Free Report) and Broadcom (AVGO - Free Report) are key providers of semiconductor chips that power artificial intelligence (AI). While AMD’s EPYC CPU and Instinct GPU power cloud, AI and high-performance computing, Broadcom’s focus is on enabling AI infrastructure through ASICs (custom chips) for hyperscalers, as well as switches, NICs, and interconnects. Both companies are benefiting from higher spending on AI infrastructure. Per CNBC, Alphabet, Meta Platforms, Amazon and Microsoft are expected to spend roughly $700 billion on developing AI infrastructure in 2026 on a combined basis.
So, AMD or Broadcom, which is a better buy in the current scenario? Let’s find out.
AMD’s Strong Portfolio, Rich Partner Base Key Catalyst
AMD outlined its “AI Everywhere, for Everyone” strategy at the CES 2026 with the introduction of Helios rack-scale platform, Instinct MI400 series lineup and Ryzen AI 400 and AI PRO 400 Series processors for AI PCs. AMD expects its data center AI revenues to see a CAGR of more than 80% over the next three to five years. Overall, data center business revenues are expected to see an annual growth rate of more than 60% over the next three to five years.
AMD’s data center AI business prospects are expected to accelerate with the upcoming MI450 series, which forms the crux of the 6-gigawatt (GWs) deal inked between AMD and Meta Platforms. Helios rack-scale architecture is gaining traction, as evident from AMD’s deals with OpenAI, Hewlett Packard Enterprise, Oracle and Lenovo. The launch of the MI500 series, powered by AMD’s CDNA 6 architecture built on advanced 2-nanometer process technology and featuring high-speed HBM4E memory, is expected to drive further growth.
However, AMD’s modest guidance for the first quarter of 2026 is expected to remain an overhang on near-term prospects. The company expects revenues of $9.8 billion (+/-$300 million), which at the mid-point indicates year-over-year growth of approximately 32% but a sequential decline of approximately 5%. AMD is facing stiff competition from the likes of Intel and NVIDIA. The Zacks Consensus Estimate for first-quarter 2026 revenues is pegged at $9.84 billion, suggesting 32.3% growth from the figure reported in the year-ago quarter.
Broadcom Rides on Strong Demand for XPUs
In the first quarter of fiscal 2026, Broadcom’s revenues from custom accelerators (XPUs) jumped 140% year over year. The company’s Semiconductor solutions revenues jumped 52% year over year to $12.52 billion. Semiconductor revenues accounted for 64.8% of net revenues in the reported quarter. The uptick in Semiconductor revenue was driven by the strong AI revenues, which surged 106% year over year. AI networking revenues grew 60% year over year and represented one-third of AI revenues.
The momentum is expected to continue in the current quarter, thanks to a clientele that includes Google, Meta Platforms and Anthropic. The company continues to gain market share in AI networking, driven by Tomahawk 6 switch, as well as Broadcom’s 200G SerDes, which are capturing demand from hyperscalers.
Broadcom expects a positive second-quarter fiscal 2026 performance, with AI revenues of $10.7 billion, suggesting a 140% year-over-year upsurge. AI networking is expected to accelerate in the second quarter of fiscal 2026 and grow to 40% of the total AI revenues. Semiconductor revenues are expected to be $14.8 billion, indicating 76% year-over-year growth. Broadcom expects revenues of $22 billion, indicating 47% year-over-year growth for the second quarter of fiscal 2026. The Zacks Consensus Estimate for revenues is currently pegged at $22.02 billion, suggesting 46.8% growth from the figure reported in the year-ago quarter.
Earnings Estimate Revision Positive for Both AVGO & AMD
The Zacks Consensus Estimate for AVGO’s fiscal 2026 earnings is pegged at $11.12 per share, up 10.6% over the past 30 days, indicating a 63.1% increase over fiscal 2025’s reported figure.
Broadcom Inc. Price and Consensus
Broadcom Inc. price-consensus-chart | Broadcom Inc. Quote
However, the consensus mark for AMD’s 2026 earnings has inched up by a penny to $6.61 per share over the past 30 days, suggesting 58.5% growth over 2025.
Advanced Micro Devices, Inc. Price and Consensus
Advanced Micro Devices, Inc. price-consensus-chart | Advanced Micro Devices, Inc. Quote
AMD Vs. AVGO: Stock Performance & Valuation
Year to date, AMD shares have dropped 6.9% compared with Broadcom’s fall of 8.7%.
AMD and AVGO Performance
Image Source: Zacks Investment Research
Valuation-wise, both AMD and Broadcom are overvalued, as suggested by the Value Score of D.
However, in terms of forward 12-month Price/Sales, AMD shares are trading at 6.7X, lower than AVGO’s 12.64X.
AMD and AVGO Valuation
Image Source: Zacks Investment Research
Conclusion
Broadcom’s expanding AI portfolio, along with a growing clientele, reflects solid top-line growth potential. AMD’s near-term prospects are modest, given the stiff competition from NVIDIA in the Data Center space.
Currently, Broadcom has a Zacks Rank #2 (Buy), making the stock a must-pick compared with AMD, which has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.