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Image source: Getty Images. AMD is picking the harder fight <\/p>\n
The million-dollar question is, how does a smaller company compete with the industry giant? Advanced Micro Devices, or AMD for short, is primarily competing head-to-head with Nvidia in general-purpose AI chips. To its credit, AMD has gotten some traction; data center revenue grew by 57% year over year to $5.8 billion in the first quarter of 2026.<\/p>\n
AMD is naturally going to see some opportunities from the AI hyperscalers who don’t want to put all their eggs in Nvidia’s basket. AMD recently announced plans to supply Meta Platforms with 6 gigawatts of its Instinct GPUs, including a custom version for the first gigawatt. But it’s unlikely that AMD will ever threaten Nvidia’s stranglehold, since Meta and other Nvidia customers have already leaned heavily on Nvidia’s CUDA software.<\/p>\n
Broadcom’s custom silicon road map makes it the winner <\/p>\n
To make a dent in Nvidia’s moat, you need to take a new path. Broadcom has done just that with its XPU chips. Instead of emphasizing general-purpose AI chips, Broadcom is co-designing custom chips for each customer’s AI workloads. That creates efficiency gains and can also build a stickier relationship with that customer. Broadcom is working with Anthropic, Alphabet, Meta Platforms, and OpenAI, among others, on custom silicon. It is a big opportunity as compute shifts from training to inference, where efficiency matters more.<\/p>\n
Wall Street sold off Broadcom hard<\/a> for its second-quarter earnings, mainly because its third-quarter AI revenue guidance came in below expectations. However, CEO Hock Tan reiterated the company’s long-term expectation of $100 billion in annual AI chip sales starting in fiscal year 2027. Broadcom generated $10.8 billion in AI revenue in the second quarter, so there’s still significant growth ahead as these custom silicon projects roll out.<\/p>\n Broadcom is worth the premium <\/p>\n Given Broadcom’s list of high-profile AI customers and continued momentum toward $100 billion in annual AI chip revenue, it’s hard not to like Broadcom’s competitive position more than AMD’s at this point. Investors may notice that Broadcom stock<\/a> is more expensive than AMD’s, but the premium seems justified.<\/p>\n Analysts see far faster growth ahead for Broadcom compared to AMD, and the valuation gap between the two isn’t that wide. Broadcom is where you want to put your money, especially after this post-earnings dip.<\/p>\n Should you buy stock in Broadcom right now? <\/p>\n Before you buy stock in Broadcom, consider this:<\/p>\n The Motley Fool Stock Advisor analyst team just identified what they believe are the\u00a010 best stocks<\/a> for investors to buy now\u2026 and Broadcom wasn\u2019t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.<\/p>\n Consider when Netflix made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation,\u00a0you\u2019d have $439,847!* Or when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you\u2019d have $1,342,065!*<\/p>\n Now, it\u2019s worth noting\u00a0Stock Advisor\u2019s total average return is 968% \u2014 a market-crushing outperformance compared to 211% for the S&P 500.\u00a0Don’t miss the latest top 10 list, available with\u00a0Stock Advisor, and join an investing community built by individual investors for individual investors.<\/p>\n See the 10 stocks \u00bb<\/a><\/p>\n *Stock Advisor returns as of June 6, 2026. <\/p>\n Justin Pope<\/a> has positions in Alphabet and Meta Platforms. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Broadcom, Meta Platforms, and Nvidia. The Motley Fool has a disclosure policy<\/a>.<\/p>\n<\/a> AVGO PS Ratio (Forward)<\/a> data by YCharts<\/a> <\/p>\n