With the arrival of artificial intelligence (AI), both NVIDIA Corporation NVDA and Broadcom Inc.’s AVGO shares have scaled upward. However, to manage AI workloads, Broadcom’s custom AI accelerators, designed in collaboration with Alphabet Inc. GOOGL, compete directly with NVIDIA’s graphic processing units (GPUs). In this context, let’s explore which one of them has the upper hand and is a better buy.

Reasons to be Bullish on NVIDIA Stock

The threat from DeepSeek’s cost-efficient large language model has been blown out of proportion, and it shouldn’t have a long-term impact on NVIDIA. This is because low-cost models will, in due course, drive more use of computing power and assist NVIDIA. The semiconductor giant, nevertheless, has the necessary resources to create affordable products and enhance the AI ecosystem.

Developers at the moment prefer NVIDIA’s CUDA software platform more than Advanced Micro Devices, Inc.’s AMD ROCm software platform. Moreover, any change from CUDA to ROCm is unlikely due to the unmanageable infrastructure transitions.

NVIDIA’s market leadership in the GPU market has already given the company a competitive edge and will drive future growth. Additionally, NVIDIA’s latest quarterly sales for the Blackwell AI processor exceeded Wall Street expectations due to its insane demand. This demand is likely to persist thanks to Blackwell’s faster AI interface and enhanced efficiency.

Reasons to be Bullish on Broadcom Stock

Strong demand for Broadcom’s custom AI accelerators and application-specific integrated chips is set to drive revenue growth. Broadcom expects to tap into the demand for custom AI accelerators, projecting a market size of $60 billion to $90 billion by 2027. 

Broadcom’s revenues from custom AI accelerators and connectivity switches were $12.2 billion in fiscal 2024, up 220% from fiscal 2023. Broadcom expects AI revenues to grow for the first quarter of the fiscal year 2025.

Acquiring VMware has benefited Broadcom’s infrastructure software solutions. The company has added more than 4500 of its top customers to VMware Cloud Foundation for deploying private cloud environments on-premises.

Moreover, Broadcom has generated substantial cash flows in fiscal 2024, which enabled it to pay out dividends. The company also spent on share repurchases as management remained confident about future earnings.

Is NVDA Stock a Better Buy Than AVGO Stock?

Ebbing DeepSeek concerns, GPU dominance, and high demand for Blackwell chips will continue to boost NVIDIA. On the other hand, strong demand for custom AI accelerators will benefit Broadcom. 

However, Broadcom’s custom AI accelerators can’t outperform NVIDIA’s GPUs because they work best when a workload is primarily assigned to run through a Broadcom-designed accelerator. 

Unlike NVIDIA, Broadcom has a much broader business. But it’s the AI hardware segment that drove sales growth in the fiscal year 2024, while its other segments struggled. Moreover, its revenue growth in the fiscal year 2024 is nothing compared to NVIDIA’s revenue growth of $130.5 billion in fiscal 2025, up 114% year over year. 

NVIDIA's higher revenue growth makes it a better buy than Broadcom currently. To top it off, buying NVIDIA stock is a more cost-effective option compared to Broadcom. After all, per the price/earnings ratio, NVDA trades at 25.6X forward earnings. In comparison, AVGO’s forward earnings multiple is 30.83.

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NVIDIA stock, rightfully, has a Zacks Rank #2 (Buy). Broadcom stock has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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