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Broadcom Rides AI Semiconductor Growth: Can it Beat NVDA & AMD?
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Key Takeaways
Broadcom's AI semiconductor revenues surged 143% to $10.8B, with $16B expected in fiscal Q3.
Custom XPUs and networking are benefiting from hyperscaler demand and six core AI customer engagements.
NVIDIA and AMD are expanding AI infrastructure platforms, intensifying competition for Broadcom.
Broadcom’s (AVGO - Free Report) Semiconductor Solutions business is being driven primarily by surging demand for AI infrastructure and is helping the company manage competition from NVIDIA (NVDA - Free Report) and Advanced Micro Devices (AMD - Free Report) . Semiconductor Solutions revenues jumped 79% year over year to a record $15 billion in the second quarter of fiscal 2026, with AI semiconductor revenues jumping 143% to $10.8 billion. AI semiconductor bookings exceeded $30 billion in the reported quarter, considerably higher than shipments, indicating strong demand visibility. Broadcom expects AI semiconductor revenues to reach $16 billion in the third quarter of fiscal 2026, indicating more than 200% year-over-year growth.
The Semiconductor Solutions segment is benefiting from strong demand for Broadcom’s custom XPUs as hyperscalers and frontier AI companies increasingly develop specialized processors for training and inference. The company has long-term engagements with six core AI customers. Broadcom has entered into a multi-generation TPU and networking agreement with Google, while Anthropic is expected to access an additional 5 gigawatts of next-generation TPU-based compute beginning in 2027. OpenAI production is scheduled to begin in late 2026, while Meta has committed to multiple generations of MTIA XPUs.
Broadcom’s leadership in networking products is complementing XPU growth because increasingly large AI clusters require high-bandwidth connectivity between accelerators. Networking accounted for almost 40% of Broadcom’s AI semiconductor revenues in the second quarter of fiscal 2026. AVGO’s portfolio includes 200G and 400G SerDes, Ethernet and PCI Express switches, Tomahawk 6 100-terabit Ethernet switches, co-packaged optics, DSPs, lasers and Jericho fabric solutions. These technologies support both scale-up connectivity inside racks and scale-out connectivity across large AI data centers.
Increasing consumption of AI tokens by enterprises and consumers is driving frontier-model providers to add substantial compute capacity. Broadcom expects this demand to remain strong through 2027 and 2028 as AI workloads expand. The company is also developing its AI XPV platform with Apollo, Blackstone and other investors, targeting more than 20 gigawatts of compute capacity through 2028, which should support greater deployment of Broadcom XPUs and networking chips.
AVGO Faces Tough Competition in the Semiconductor Market
Broadcom is facing stiff competition from NVIDIA and AMD in the semiconductor space.
NVIDIA is intensifying competitive pressure on Broadcom by expanding beyond GPUs into a complete AI-infrastructure platform encompassing CPUs, scale-up and scale-out networking, systems and software. NVIDIA’s Vera Rubin platform combines Vera CPUs, Rubin GPUs, NVLink, InfiniBand or Ethernet and other accelerators, increasing its revenue opportunity per gigawatt from about $18 billion with Hopper to $40 billion with Vera Rubin.
AMD is also becoming a stronger alternative to Broadcom as it expands from CPUs and GPUs into rack-scale AI infrastructure. AMD’s Helios platform integrates EPYC Venice CPUs, MI450-Series GPUs, Pensando networking and ROCm software, creating a more complete AI system competing for the same hyperscaler and frontier-model infrastructure spending targeted by Broadcom’s custom accelerators and networking portfolio.
Broadcom shares have appreciated 6.2% year to date, underperforming the broader Zacks Computer and Technology sector’s return of 15.4%.
AVGO Stock Lags Sector
Image Source: Zacks Investment Research
The AVGO stock is trading at a premium, with a forward 12-month price/sales of 10.38X compared with the broader sector’s 6.31X. Broadcom has a Value Score of D.
AVGO Stock Has a Stretched Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for fiscal 2026 earnings is pegged at $11.74 per share, unchanged over the past 30 days, suggesting 72.14% growth from the figure reported in fiscal 2025.
View the Zacks #1 Rank List
Image: Bigstock
Broadcom Rides AI Semiconductor Growth: Can it Beat NVDA & AMD?
Key Takeaways
Broadcom’s (AVGO - Free Report) Semiconductor Solutions business is being driven primarily by surging demand for AI infrastructure and is helping the company manage competition from NVIDIA (NVDA - Free Report) and Advanced Micro Devices (AMD - Free Report) . Semiconductor Solutions revenues jumped 79% year over year to a record $15 billion in the second quarter of fiscal 2026, with AI semiconductor revenues jumping 143% to $10.8 billion. AI semiconductor bookings exceeded $30 billion in the reported quarter, considerably higher than shipments, indicating strong demand visibility. Broadcom expects AI semiconductor revenues to reach $16 billion in the third quarter of fiscal 2026, indicating more than 200% year-over-year growth.
The Semiconductor Solutions segment is benefiting from strong demand for Broadcom’s custom XPUs as hyperscalers and frontier AI companies increasingly develop specialized processors for training and inference. The company has long-term engagements with six core AI customers. Broadcom has entered into a multi-generation TPU and networking agreement with Google, while Anthropic is expected to access an additional 5 gigawatts of next-generation TPU-based compute beginning in 2027. OpenAI production is scheduled to begin in late 2026, while Meta has committed to multiple generations of MTIA XPUs.
Broadcom’s leadership in networking products is complementing XPU growth because increasingly large AI clusters require high-bandwidth connectivity between accelerators. Networking accounted for almost 40% of Broadcom’s AI semiconductor revenues in the second quarter of fiscal 2026. AVGO’s portfolio includes 200G and 400G SerDes, Ethernet and PCI Express switches, Tomahawk 6 100-terabit Ethernet switches, co-packaged optics, DSPs, lasers and Jericho fabric solutions. These technologies support both scale-up connectivity inside racks and scale-out connectivity across large AI data centers.
Increasing consumption of AI tokens by enterprises and consumers is driving frontier-model providers to add substantial compute capacity. Broadcom expects this demand to remain strong through 2027 and 2028 as AI workloads expand. The company is also developing its AI XPV platform with Apollo, Blackstone and other investors, targeting more than 20 gigawatts of compute capacity through 2028, which should support greater deployment of Broadcom XPUs and networking chips.
AVGO Faces Tough Competition in the Semiconductor Market
Broadcom is facing stiff competition from NVIDIA and AMD in the semiconductor space.
NVIDIA is intensifying competitive pressure on Broadcom by expanding beyond GPUs into a complete AI-infrastructure platform encompassing CPUs, scale-up and scale-out networking, systems and software. NVIDIA’s Vera Rubin platform combines Vera CPUs, Rubin GPUs, NVLink, InfiniBand or Ethernet and other accelerators, increasing its revenue opportunity per gigawatt from about $18 billion with Hopper to $40 billion with Vera Rubin.
AMD is also becoming a stronger alternative to Broadcom as it expands from CPUs and GPUs into rack-scale AI infrastructure. AMD’s Helios platform integrates EPYC Venice CPUs, MI450-Series GPUs, Pensando networking and ROCm software, creating a more complete AI system competing for the same hyperscaler and frontier-model infrastructure spending targeted by Broadcom’s custom accelerators and networking portfolio.
AVGO’s Share Price Performance, Valuation & Estimates
Broadcom shares have appreciated 6.2% year to date, underperforming the broader Zacks Computer and Technology sector’s return of 15.4%.
AVGO Stock Lags Sector
Image Source: Zacks Investment Research
The AVGO stock is trading at a premium, with a forward 12-month price/sales of 10.38X compared with the broader sector’s 6.31X. Broadcom has a Value Score of D.
AVGO Stock Has a Stretched Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for fiscal 2026 earnings is pegged at $11.74 per share, unchanged over the past 30 days, suggesting 72.14% growth from the figure reported in fiscal 2025.
Broadcom Inc. Price and Consensus
Broadcom Inc. price-consensus-chart | Broadcom Inc. Quote
Broadcom currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.