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NVIDIA vs. Broadcom: The AI Stock You Should Buy Right Now
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Key Takeaways
NVIDIA's Data Center revenues jumped 92% as cloud providers increased AI infrastructure spending.
Broadcom's AI semiconductor revenues rose 143%, with fiscal Q3 guidance pointing to another sharp increase.
NVIDIA's 3.8% debt-to-equity ratio and 99.7% ROE compare favorably with Broadcom's 71.5% and 41.6%.
Both NVIDIA Corporation (NVDA - Free Report) and Broadcom Inc. (AVGO - Free Report) have gained from an accelerating artificial intelligence (AI) boom and have recently registered strong growth and profitability. However, if investors had to choose between the two, which stock would be the better pick? Let’s take a closer look –
The Bullish Case for NVDA Stock
Sustained demand for NVIDIA’s advanced chips and computing platforms helped the company post revenues of $81.6 billion in the fiscal first quarter of 2027, up 85% year over year and 20% sequentially, according to the company’s press release.
Data Center revenues in particular reached a record $75.2 billion in the fiscal first quarter, up 92% year over year and 21% from the previous quarter. As major cloud providers ramped up spending on AI infrastructure, demand for NVIDIA’s graphics processing units (GPUs) increased, which supported strong growth in the company’s Data Center business.
Looking ahead, banking on continued strength in AI demand, NVIDIA expects revenues to reach $91 billion, plus or minus 2% in the fiscal second quarter of 2027. Importantly, growth is likely to remain highly profitable as the company forecasts a non-GAAP gross margin of 75%, plus or minus 0.5% in the fiscal second quarter, broadly in line with the 75% margin reported in the fiscal first quarter.
The Bullish Case for AVGO Stock
Broadcom’s recent AI semiconductor revenue growth has been remarkable. For the fiscal second quarter of 2026, Broadcom’s AI semiconductor revenues were $10.8 billion, up 143% year over year, according to the company’s press release. Revenue growth was driven not only by strong GPU sales but also by increased demand for custom AI accelerators and AI networking.
Most importantly, the momentum is expected to continue, with the company expecting AI semiconductor revenues to reach $16 billion in the fiscal third quarter of 2026, up over 200% year over year and around 48% sequentially. This shows that Broadcom’s AI growth isn’t just a temporary spike but a sustained, multi-year growth cycle.
Broadcom’s margins remain remarkably strong. The company reported an adjusted EBITDA of $15.2 billion on consolidated revenues of $22.2 billion in the fiscal second quarter, translating to an adjusted EBITDA margin of 69%. It expects to sustain an EBITDA margin of around 68% in the fiscal third quarter, highlighting phenomenal operating leverage as revenue growth continues alongside high profitability.
NVIDIA or Broadcom: Which AI Stock Is the Better Buy
Strong AI-driven demand, record Data Center growth and expanding margins point to NVIDIA’s continuous growth potential. Similarly, Broadcom’s strong growth in AI semiconductors and robust margins underscore its ability to benefit from the long-term AI infrastructure boom. However, Broadcom’s heavy dependence on AI spending and limited number of AI customers leaves it vulnerable to any slowdown in AI infrastructure investment or in hyperscalers’ demand.
Additionally, Broadcom’s debt-to-equity ratio of 71.5% far exceeds NVIDIA’s 3.8%, indicating greater financial risk and potentially higher downside risk during periods of economic weakness.
Image Source: Zacks Investment Research
Lastly, NVIDIA appears more efficient at generating profits than Broadcom. This is because NVIDIA’s return on equity (ROE) of 99.7% exceeds Broadcom’s ROE of 50.1%.
Image Source: Zacks Investment Research
NVIDIA’s stronger profitability, lower financial risk, and AI leadership give it an investment edge over Broadcom despite both benefiting immensely from the long-term AI boom. Currently, NVIDIA has a Zacks Rank #2 (Buy), while Broadcom carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.
View the Zacks #1 Rank List
Image: Shutterstock
NVIDIA vs. Broadcom: The AI Stock You Should Buy Right Now
Key Takeaways
Both NVIDIA Corporation (NVDA - Free Report) and Broadcom Inc. (AVGO - Free Report) have gained from an accelerating artificial intelligence (AI) boom and have recently registered strong growth and profitability. However, if investors had to choose between the two, which stock would be the better pick? Let’s take a closer look –
The Bullish Case for NVDA Stock
Sustained demand for NVIDIA’s advanced chips and computing platforms helped the company post revenues of $81.6 billion in the fiscal first quarter of 2027, up 85% year over year and 20% sequentially, according to the company’s press release.
Data Center revenues in particular reached a record $75.2 billion in the fiscal first quarter, up 92% year over year and 21% from the previous quarter. As major cloud providers ramped up spending on AI infrastructure, demand for NVIDIA’s graphics processing units (GPUs) increased, which supported strong growth in the company’s Data Center business.
Looking ahead, banking on continued strength in AI demand, NVIDIA expects revenues to reach $91 billion, plus or minus 2% in the fiscal second quarter of 2027. Importantly, growth is likely to remain highly profitable as the company forecasts a non-GAAP gross margin of 75%, plus or minus 0.5% in the fiscal second quarter, broadly in line with the 75% margin reported in the fiscal first quarter.
The Bullish Case for AVGO Stock
Broadcom’s recent AI semiconductor revenue growth has been remarkable. For the fiscal second quarter of 2026, Broadcom’s AI semiconductor revenues were $10.8 billion, up 143% year over year, according to the company’s press release. Revenue growth was driven not only by strong GPU sales but also by increased demand for custom AI accelerators and AI networking.
Most importantly, the momentum is expected to continue, with the company expecting AI semiconductor revenues to reach $16 billion in the fiscal third quarter of 2026, up over 200% year over year and around 48% sequentially. This shows that Broadcom’s AI growth isn’t just a temporary spike but a sustained, multi-year growth cycle.
Broadcom’s margins remain remarkably strong. The company reported an adjusted EBITDA of $15.2 billion on consolidated revenues of $22.2 billion in the fiscal second quarter, translating to an adjusted EBITDA margin of 69%. It expects to sustain an EBITDA margin of around 68% in the fiscal third quarter, highlighting phenomenal operating leverage as revenue growth continues alongside high profitability.
NVIDIA or Broadcom: Which AI Stock Is the Better Buy
Strong AI-driven demand, record Data Center growth and expanding margins point to NVIDIA’s continuous growth potential. Similarly, Broadcom’s strong growth in AI semiconductors and robust margins underscore its ability to benefit from the long-term AI infrastructure boom. However, Broadcom’s heavy dependence on AI spending and limited number of AI customers leaves it vulnerable to any slowdown in AI infrastructure investment or in hyperscalers’ demand.
Additionally, Broadcom’s debt-to-equity ratio of 71.5% far exceeds NVIDIA’s 3.8%, indicating greater financial risk and potentially higher downside risk during periods of economic weakness.
Image Source: Zacks Investment Research
Lastly, NVIDIA appears more efficient at generating profits than Broadcom. This is because NVIDIA’s return on equity (ROE) of 99.7% exceeds Broadcom’s ROE of 50.1%.
Image Source: Zacks Investment Research
NVIDIA’s stronger profitability, lower financial risk, and AI leadership give it an investment edge over Broadcom despite both benefiting immensely from the long-term AI boom. Currently, NVIDIA has a Zacks Rank #2 (Buy), while Broadcom carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.