Two of the top semiconductor companies looking to eat into Nvidia's (NVDA 1.36%) artificial intelligence (AI) infrastructure dominance are Broadcom (AVGO 1.21%) and Advanced Micro Devices (AMD 3.20%). Both stocks have performed well in 2025, led by AMD, which is up more than 70% year to date, as of this writing, compared to about a 45% gain for Broadcom.
The question, though, is which stock will perform better in 2026. Let's look at the case for both stocks.
Image source: Getty Images.
The case for AMD
NASDAQ: AMD
Key Data Points
AMD is the distant No. 2 player in the graphics processing unit (GPU) market behind Nvidia. However, the company has carved out a nice niche in inference, where price-per-inference costs are more important than raw computing power, given its ongoing nature, and where Nvidia's CUDA software moat isn't quite as wide. Importantly, inference is also eventually expected to become a much larger market than training over time.
Microsoft has already been working on a toolkit to convert CUDA software code to AMD's ROCm in order to use more of AMD's GPUs for inference. Meanwhile, the company struck a partnership with OpenAI to deploy 6 gigawatts of GPUs, beginning with 1 gigawatt next year. As part of the deal, OpenAI is also taking a stake in AMD through warrants that vest based on deployment milestones. It also has a deal with Saudi Arabian company Humain.
GPUs are not AMD's only business, however. The company is also the leading provider of central processing units (CPUs), both in computers and in the data center. While GPUs provide the muscle, CPUs act as the brain. The market isn't as large as the one for GPUs, but it is growing quickly, and AMD has been taking share in the data center space.
The case for Broadcom
NASDAQ: AVGO
Key Data Points
Broadcom is attacking the AI chip market much differently than Nvidia and AMD. Instead of making GPUs, the company helps customers design custom AI ASICs (application-specific integrated circuits). These are preprogrammed chips that are hardwired for specific tasks, and as such, they can both perform better and be more energy efficient.
Broadcom helped Alphabet develop its highly successful Tensor Processing Units (TPUs), which have led to other big hyperscalers (owners of massive data centers) becoming customers. It has said its three furthest along customers could be a more than $60 billion opportunity in its fiscal year 2027 (ending October 2027), and a fourth customer, Anthropic, has placed a $21 billion order for Alphabet's TPUs that it will fulfill.
In addition, Broadcom is working with OpenAI, and it will deploy 10 gigawatts of custom AI chips, worth hundreds of billions of dollars, to be completed before the end of 2029. There have also been reports that Apple is working with Broadcom on developing its own custom AI chips and that they could be ready for mass production next year.
Broadcom also has a strong networking portfolio, which consists of components, such as Ethernet switches and routers, that help transfer data and distribute AI workloads across servers. This business has also been booming, given the ongoing data center build-out.
The verdict
Both AMD and Broadcom trade at similar valuations. AMD has a forward price-to-earnings (P/E) multiple of 32 times next year's analyst estimates, while Broadcom trades at around 33.5 times its fiscal-year 2026 estimates (ending October 2026). As such, which stock outperforms will likely come down to their growth next year, as well as future expectations.
I think both stocks can once again have strong performances in 2026, but I think Broadcom will be the stock that will outperform. The company just has an explosive growth opportunity in front of it over the next few years with custom chips. The custom chip business requires high upfront costs, so these are multiyear commitments, usually for large projects. Many of these deals are already in place (as seen in its $73 billion backlog), and now it just has to deliver.
