Is Broadcom Stock Now a Better Buy Than Nvidia?
Written by Keithen Drury for The Motley Fool -> Nvidia and Broadcom are competing for computing space in data centers. Nvidia is far cheaper by one valuation metric. Broadcom (NASDAQ: AVGO) has had a solid 2026, but a rough couple of weeks recently. It's up more than 13% for t
Nvidia and Broadcom are competing for computing space in data centers.
Broadcom (NASDAQ: AVGO) has had a solid 2026, but a rough couple of weeks recently. It's up more than 13% for the year, but it used to be up around 40% prior to its earnings announcement. Now, it's down around 20% from its all-time highs.
Prior to the sell-off, it was pretty clear that Nvidia (NASDAQ: NVDA) was a better buy than Broadcom, but now that there has been a significant price correction, is that still the case? Let's take a look and see which of these two artificial intelligence (AI) chip makers is the better buy now.
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Nvidia is the industry standard in the AI investing realm. Its GPUs are commonly used in data centers to train and run AI models, and nearly every AI company has a large chunk of its computing power from Nvidia. With how rapidly Nvidia is growing, this isn't likely to change.
Furthermore, many companies have their workloads designed to run on Nvidia infrastructure, and changing to a different computing provider would be painful. But Broadcom is looking to change their minds.
GPUs are incredibly powerful and suited for a wide variety of workloads, but the reality is that some GPUs only see one type of workload occur throughout their lifespan. So, some of its capabilities are wasted, and could have been sold at a cheaper price point if those features weren't included. Additionally, the resulting computing unit could also be optimized to run just that workload. This idea is what drives Broadcom's custom AI chip business.
Broadcom partners with AI hyperscalers to design a custom AI chip that is tailored for their workload. In a wide-ranging test, it would fail and lose to a GPU. But these custom AI chips outperform GPUs at a lower price point when only that optimized workload type is tested.
