Nvidia (NVDA 0.80%) has been the top player in the artificial intelligence (AI) chip market for the past three and a half years, which isn't surprising, as the massive parallel computing power of its graphics processing units (GPUs) has made them ideal for training and deploying AI models and applications.
Nvidia reportedly controls 81% of the data center chip market, according to IDC. The company's sustained dominance in AI chips can be attributed to the technological advantage of GPUs in performing vast numbers of calculations quickly. As a result, Nvidia's financial performance continues to be impressive even though it is now the world's largest company by market cap.
However, there's another chip designer that's quickly catching up to Nvidia in AI chips: Broadcom (AVGO 1.66%). I predict Broadcom will become as important as Nvidia in this market by the end of the decade.
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Broadcom's AI revenue is poised to grow at an incredible pace
Unlike Nvidia, Broadcom makes custom processors known as application-specific integrated circuits (ASICs). These ASICs are designed to perform specific tasks compared to the general-purpose nature of GPUs. The purpose-built nature of ASICs means that they are speedier and more power-efficient compared to general-purpose chips, while being smaller in size.
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Key Data Points
ASICs are gaining traction in AI data centers, and Broadcom is the leading player in ASICs, with Counterpoint Research expecting it to control 60% of this space by next year. The strong market share explains why the company's AI revenue grew at a terrific pace last quarter.
Broadcom released fiscal 2026 first-quarter results (for the three months ended Feb. 1) on March 4. The company's overall revenue increased by 29% to $19.3 billion. Its AI revenue increased by a whopping 106% year over year to $8.4 billion, accounting for 43% of the top line. That's a big increase over Broadcom's AI revenue share of 27% in the year-ago period.
The good news for investors is that Broadcom anticipates further acceleration in AI revenue this quarter, to $10.7 billion. Even better, Broadcom estimates that it has the potential to achieve more than $100 billion in AI chip revenue in 2027. In the words of CEO Hock Tan on the latest earnings call:
Today, in fact, we have line of sight to achieve AI revenue from chips, just chips, in excess of $100 billion in 2027. We have also secured the supply chain required to achieve this.
That points toward a 5x increase over Broadcom's AI revenue in fiscal 2025 (which ended in November 2025) in a short span of just two years. However, don't be surprised to see Broadcom's AI revenue becoming much bigger by the end of the decade. Bloomberg estimates that Broadcom could control 60% to 80% of the custom ASIC market, driven by its partnerships with the likes of Google, OpenAI, Anthropic, and Meta Platforms.
Bloomberg expects AI-focused ASICs to account for 19% of the $600 billion AI chip market in 2033. However, Broadcom's AI revenue forecast suggests that the shift from general-purpose GPUs to custom AI processors is happening at a faster pace. That isn't surprising given the cost and performance advantages of ASICs.
Why Broadcom is likely to become the next Nvidia
The remarkable acceleration in Broadcom's AI revenue growth will be driven by the large-scale deployments of its custom AI processors by major hyperscalers and pure-play AI companies. For instance, Anthropic is on track to deploy 1 gigawatt (GW) worth of its custom processors in 2026, followed by more than 3 GW next year.
OpenAI, meanwhile, is expected to buy 1 GW of Broadcom's custom chips next year. Broadcom believes that its next-generation custom AI processors "will scale to multiple gigawatts in 2027 and beyond" at Meta Platforms. For comparison, Anthropic struck a deal with Nvidia to buy 1 GW of compute capacity in November last year. Also, Nvidia has a 10 GW deal with OpenAI to deploy its chip systems, equivalent to the ChatGPT maker's deal with Broadcom that was announced in October last year.
These deals suggest that Broadcom's stature in AI chips is improving rapidly. Moreover, Broadcom's AI revenue is now increasing at a much faster pace than Nvidia's. We saw that Broadcom's AI revenue rose 106% year over year in the most recent quarter (which ended on Feb. 1) to $8.4 billion. For comparison, Nvidia's data center revenue in its most recent quarter (which ended on Jan. 25) increased by 75% from the prior-year period.
Of course, Nvidia reported a record $62.3 billion in data center revenue for the quarter, suggesting an annual revenue rate of almost $250 billion, but Broadcom's faster growth rate and outlook suggest that it is set to catch up rapidly. Specifically, Broadcom's $100 billion AI revenue estimate for next year suggests that it could clock a quarterly revenue rate of $25 billion.
Moreover, the custom AI processor market is poised to grow at an annual rate of 27% through 2033, according to Bloomberg. Broadcom is growing at a much faster pace, a trend that could continue due to its leading position in custom ASICs. If Broadcom can achieve 35% annual growth in AI revenue in 2028, 2029, and 2030, its annual revenue from this segment could hit $246 billion by the end of the decade (using the $100 billion 2027 revenue estimate as the base).
So, Broadcom can indeed achieve Nvidia-like AI revenue by 2030, putting this semiconductor stock on track to deliver more upside to investors, considering that its market cap of $1.5 trillion is almost a third of Nvidia's market cap.
