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NVIDIA vs. Broadcom: Which AI Semiconductor Stock Offers More Upside?
ZACKS· 2025-08-19 13:11
Core Insights - NVIDIA Corporation (NVDA) and Broadcom Inc. (AVGO) are pivotal semiconductor companies driving the AI revolution, with NVIDIA focusing on GPUs and Broadcom on networking chips and custom ASICs [1] - Both companies have experienced significant stock price increases in 2023, with NVIDIA up 35.5% and Broadcom up 31.9% year to date [2] NVIDIA Overview - NVIDIA is central to AI computing, with strong demand from cloud providers and enterprises, leading to a 73% year-over-year increase in data center revenues to $39.1 billion in Q1 FY26 [6][9] - The company is rapidly adopting its new Hopper 200 and Blackwell GPU platforms, with expectations for further performance improvements from upcoming versions [7] - However, NVIDIA faces challenges from export restrictions to China, resulting in a loss of $2.5 billion in H20 chip sales during Q1 FY26 and an expected $8 billion loss in Q2 [8][9] - Despite these challenges, NVIDIA received approval to sell H20 chips in China under a revenue-sharing agreement with the U.S. government, which may impact margins [11] Broadcom Overview - Broadcom is a key player in the AI ecosystem, supplying networking chips and custom AI accelerators (XPUs) essential for hyperscale data centers [12][13] - The company is experiencing strong demand for its products, with AI-related revenues expected to rise 60% year-over-year to $5.1 billion in Q3 FY25 [16] - Broadcom's next-generation 3-nanometer XPUs are set for volume shipment in the second half of FY25, with plans for 2-nanometer AI XPU packaging [14][15] Financial Performance Comparison - NVIDIA's fiscal 2026 earnings estimate is $4.26 per share, reflecting a 42.5% increase over fiscal 2025, while Broadcom's fiscal 2025 estimate is $6.63 per share, indicating 36.1% growth [17] - Broadcom has consistently surpassed earnings estimates, while NVIDIA has had mixed results [18] Valuation Insights - Both companies are considered overvalued, with NVIDIA trading at a forward P/E of 36.26X and Broadcom at 38.46X, indicating NVIDIA may appear as the better deal [19] - Broadcom's premium valuation reflects its diversified business model and steadier earnings profile compared to NVIDIA's exposure to regulatory changes and competition [22] Investment Recommendation - While both companies are positioned to benefit from AI, Broadcom presents a more attractive risk-reward balance due to NVIDIA's near-term challenges and growth uncertainties [23] - Broadcom currently holds a Zacks Rank 2 (Buy), while NVIDIA has a Zacks Rank 3 (Hold), suggesting Broadcom is the preferred investment option [24]
3 Red-Hot S&P 500 Growth Stocks to Buy with Room to Run in the Second Half of 2025
The Motley Fool· 2025-07-15 08:15
So far in 2025, Netflix (NFLX 1.28%), Oracle (ORCL -0.56%), and Broadcom (AVGO 0.48%) have skyrocketed 39.7%, 38.4%, and 18.4%, respectively, compared to a 6.4% gain in the S&P 500 (^GSPC 0.14%). Here's why these red-hot growth stocks have more room to run in the second half of the year despite their expensive valuations. In years past, too much of Netflix's massive production budget often went toward shows that weren't received well by audiences, but its occasional big hits would essentially make up for th ...