Who will dethrone NVIDIA? Broadcom or AMD?

Broadcom and AMD are getting closer after spectacular increases in their prices. Over one year, the increase was 94% for Broadcom and 455% for AMD compared to “only” 62% for NVIDIA.

Boadcom: king of custom chips (ASIC)

Broadcom ne cherche pas à copier NVIDIA. 
The company has chosen to position itself as the essential technological partner of web giants (“hyperscalers”) such as Amazon, Microsoft, Alphabet and Meta, to design tailor-made infrastructures. It designs semiconductors (58% of its turnover) and infrastructure software (42%). Its main customers are large cloud operators and telecom equipment manufacturers. Broadcom is now worth more than $2,000 billion on the stock market, making it the seventh largest company in the world.

Broadcom : caractéristiques

– Broadcom designs exclusive chips for clients like Alphabet or Meta who are increasingly seeking to free themselves from their dependence on NVIDIA chips for their AI models.

– Broadcom dominates the market for network switching chips, essential for interconnecting the thousands of processors in AI data centers.

– Broadcom prioritizes profitability and domination of critical market niches, not volume. This results in a very comfortable operating margin (67% in the last quarter compared to 65% a year earlier), which also reflects its ability to set high prices.

– The success of Broadcom’s business depends on a handful of wealthy customers. The slightest slowdown in their orders would have an immediate impact. It’s a significant risk but it is comparable at NVIDIA which depends on the same customers.

Broadcom : résultats et perspectives

Broadcom’s results have improved significantly in recent years.
Over 5 years, turnover has increased by an average of 22% per year and earnings per share by 25%.
Growth that has accelerated with the arrival of AI.
The latest published quarterly result reveals an increase of 48% in turnover and 54% in earnings per share.
And the outlook is promising with an expected increase in earnings per share of 69% over the current financial year and 70 and 32% over the next two.

Broadcom : notre conseil

Broadcom has high profitability and a solid financial position.
The share valuation remains reasonable.
Certainly, the expected price/earnings per share ratio is rather high (36 compared to 20 on average for the semiconductor sector). But it is justified by the strong prospects for profit growth.
KEEP.

 

AMD: historic rival of Intel in CPUs and now of NVIDIA in GPUs

AMD competes directly with NVIDIA in graphics processing units (GPUs) for data centers. Intel’s historic rival in computer processors (CPUs), the group has wisely reoriented itself towards complex architectures with high margins: processors for computer servers and data centers.
The group’s rebound, which was on the verge of filing for bankruptcy, was spectacular. Its market capitalization has increased from less than $3 billion in 2014 to nearly $900 billion today.

AMD: characteristics

– The real starting point of AMD’s success story comes from a major strategic reorientation initiated by the current general director, Lisa Su, upon taking office more than 10 years ago. Rather than continuing to suffer the price war in the market in decline of consumer computers, it redirected engineering resources toward much more profitable server processors and data centers.

– AMD abandoned traditional monolithic chip designs to invent the Zen architecture based on “chiplets” of independent chip modules assembled together.
This innovation brought two decisive advantages:
       • des coûts de fabrication considérablement réduits,
       • unprecedented flexibility and computing power which made it possible to launch the Ryzen range of processors (for PCs) and especially EPYC (for servers).
Thanks to this, AMD literally stripped Intel of its historic market share in data centers.

– To stop the financial bleeding, Lisa Su definitively separated the design activity from that of manufacturing. AMD became a “fabless” company, entrusting the entire physical production of its chips to the Taiwanese giant TSMC. This made it freed from colossal industrial costs and allowed it to immediately benefit from the most advanced engraving technologies in the world.

– Once the company was saved and profitable, Lisa Su orchestrated strategic acquisitions to position AMD against NVIDIA in the race for artificial intelligence.
First, the purchase of Xilinx for nearly $50 billion, the leader in programmable chips (FPGA), essential for the automobile and telecom sector.
Then the acquisition of Pensando and ZTÂ Systems to master network management and the complete assembly of supercomputers.
Thanks to this, AMD no longer sells just processors, but complete AI architectures (like the Instinct MI300 chips and its successors), capable of handling giant language models. AMD offers the only true mainstream alternative capable of competing with the raw computing power of NVIDIA.

– Chasing the leader is expensive. AMD’s gross margin historically fluctuates around 50 to 55% (compared to more than 75% for NVIDIA). Due to massive investments, its 2025 operating margin was 22%, compared to 65% for NVIDIA and 66% for Broadcom.

AMD: results and prospects

In the 1st quarter of 2026, AMD’s revenue increased by 38% and earnings per share by 43%. Over 5 years, turnover has increased on average 29% per year and earnings per share 26%. Earnings per share are expected to grow by 78% in 2026, 76% in 2027 and 39% in 2028.

AMD: our advice

Profit growth prospects are certainly high for AMD but the price largely takes this into account, with a price/earnings per share ratio expected in 2026 of 70, compared to 20 on average for the semiconductor sector.
The quality of fundamentals is rather low and the volatility very high.
Take advantage of the recent surge to take your profits.
SELL.