One of the most explosive areas of the artificial intelligence (AI) infrastructure build-out is in data center networking. As AI chip clusters grow in size and complexity, networking becomes even more important to ensure they run optimally.
Two of the top AI networking stocks to own are Broadcom (AVGO +5.06%) and Arista Networks (ANET +2.86%). Let's see which is the better AI stock to buy right now.
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Broadcom
Broadcom is a market leader in networking hardware. The company makes a variety of networking components, including Ethernet switches, digital signal processors (DSPs), SerDes (Serializer/Deserializer), and network interface cards (NICs), which data center operators use to direct data flow and distribute AI workloads across servers.
Its Tomahawk Ethernet switch, meanwhile, is considered the industry standard for high-bandwidth switching used in AI data centers. The company has seen strong growth from this segment, with revenue climbing 60% last quarter, and this business is expected to accelerate in the current quarter.
NASDAQ: AVGO
Key Data Points
However, Broadcom is about much more than networking. The company also makes a range of semiconductors for several industries and owns a portfolio of software solutions, led by virtualization platform VMware.
Yet the most important part of its business outside of networking is that the company is a leader in ASIC (application-specific integrated circuit) technology. With this business, the company helps customers create custom AI chips by providing the building blocks and intellectual property they need to turn their designs into physical chips that can be manufactured in mass quantities.
Broadcom helped Alphabet develop its highly successful Tensor Processing Units (TPUs). The growth of TPUs is a driver for the company, especially as Alphabet has let other companies place orders for them. For example, Broadcom received a $21 billion TPU order from Anthropic to be delivered this year.
Meanwhile, on the back of the success of TPUs, other hyperscalers (owners of large data centers) have also sought Broadcom's services to help them make their own custom AI chips. Broadcom has projected this will be a $100 billion business alone in its fiscal 2027, which is more than 50% more of the total revenue it generated last fiscal year.
Arista Networks
In the world of data center networking, Arista isn't a competitor to Broadcom; it's a partner. While Broadcom makes networking components, Arista is one of the companies that assembles them together into a nice package. Using an analogy from the auto space, think of Broadcom as a high-end engine maker and Arista as a luxury carmaker.
NYSE: ANET
Key Data Points
Arista's strength stems from its Extensible Operating System (EOS) software platform. Its platform is considered easy to manage and very stable, making it a preferred choice in the data center. Microsoft and Meta Platforms are two of its largest customers, and both are spending a boatload on AI infrastructure at the moment. Meanwhile, Arista's Blue Box initiative, which delivers improved diagnostics on its hardware platforms, has been gaining momentum.
The company saw revenue increase by 29% last quarter to $2.49 billion, and it now expects 2026 revenue to climb by 25%. AI networking revenue, meanwhile, is expected to double. Despite the robust growth outlook, Arista noted that it is taking a generally conservative view due to supply constraints stemming from a shortage in the memory market.
Which is the better stock to own?
I think at this point, Broadcom is clearly the better stock to own. While both stocks are riding the AI infrastructure wave in networking, Broadcom is set to see explosive growth with its custom AI chip business.
Meanwhile, Broadcom is also the much cheaper AI stock to own, trading at a forward price-to-earnings (P/E) ratio of 29 versus 37.5 for Arista. The gap widens even further when looking one year out, with Broadcom's P/E falling to 18.5 versus 31 for Arista.
