The two biggest names for AI investments are nvidia (NVDA) -8.69%)) and Broadcom (avgo) -6.05%)). The companies in both companies are making significant profits from the competition in the AI military, so investors are very interested in them.
However, investors can be torn apart for being a good inventory to buy now. So, if you want to add to one of these large winners, which one should you choose?
Nvidia and Broadcom compete to calculate hardware market share
First, let’s take a look at how each company is doing its best.
Nvidia manufactures a Graphic Processing Unit (GPU) and a variety of hardware and software to support its use. The GPU started with gaming graphics, but can also be used to mine cryptocurrency, process engineering simulations, and assist in navigating self-driving cars. These are large use cases, but are warped by the large demand for GPUs from the AI sector.
GPUs are popular because they can process multiple calculations in parallel and connect to clusters to further amplify this effect. Nvidia is a top GPU producer and its stock performance backs up its statement.
Broadcom is a much broader business than Nvidia. They range from mainframe computers and software to cybersecurity solutions and virtual desktop software. However, two product lines that encourage AI-focused investors are custom accelerators and connection switches.
Broadcom’s connectivity switches are a key part of creating efficient systems that help direct traffic in your data center. Its custom AI accelerator is a direct competitor of Nvidia’s GPUs and is designed by Broadcom and its technological leading partners (such as Alphabet). (Goog -2.07%)) (googl -1.92%))) Handle AI workloads better. However, these custom accelerators are only great choices if the workload is specially configured to run through accelerators designed by Broadcom, so they won’t abdicate the GPU.
Broadcom is looking at a huge market for these custom accelerators, and expects it to range from $60 billion to $90 billion by 2027. This represents huge growth, considering it was $12.2 billion in fiscal year 2024 (including connectivity switches and custom accelerators). It could also take market share from Nvidia, which recorded $115 billion in data center revenue in 2025 (until January 26th).
I’m not going to discuss whether GPUs or custom accelerators are the way of the future, but it’s important to watch some of Nvidia’s biggest clients and start a discussion only about using their own designs, or continue to order a mountain of Nvidia GPUs.
It’s impossible to know how this works, but one inventory clearly looks like a better purchase now.
Nvidia stock is much cheaper than Broadcom stock
When comparing valuations of these two stocks, it is not possible to use subsequent revenue metrics, as Broadcom has a one-off effect of removing this metric from the bang. Instead, use a forward to airing (P/E) ratio to evaluate the valuation of each stock.
AVGO PE ratio (forward) data from YCHARTS
Nvidia’s stock is much cheaper than Broadcom, with earnings of 27x before. This is noteworthy as Nvidia is growing much faster than Broadcom.
Investors are excited by Broadcom’s AI hardware outlook, but the reality is that they only make up a small portion of the company’s total revenue. In 2024, AI-related revenue was $12.2 billion, roughly 24% of total revenue. These segments were growing rapidly, but they were owned in their overall business.
At face value, Broadcom appeared to have grown 44% year-on-year, but Broadcom’s acquisition of VMware had a major impact on it. Without that purchase, Broadcom’s revenue would have only increased by 9% organically. Nvidia’s 2025 growth rate was $130.5 billion, in contrast to an increase of 114% year-on-year, and it is clear that Nvidia is a good stock to buy.
Broadcom may be your beloved person in the market’s eyes, but it’s clear that Nvidia is still a great stock to buy. Nvidia’s stock is a bit weaker after earnings, so investors should take advantage of this opportunity to scoop up the stock of this dominant AI player.
Suzanne Frey, an executive at Alphabet, is a member of the board of directors of Motley Fool. Kizen Drury has the alphabet and nvidia positions. We recommend Alphabet and Nvidia for Motley Fool. Motley Fool recommends Broadcom. Motley Fools have a disclosure policy.
