Nvidia and Broadcom: The AI Chip Stocks Driving the Data Center Boom

The AI chip market is no longer a simple battle between Nvidia and Broadcom. Instead, it's becoming clear that both companies are vying for dominance in the data center, with their chips being used by hyperscalers like Google Cloud and Meta Platforms.

Nvidia has been expanding its reach beyond just GPUs, with its Grace CPUs generating over $5 billion in sales last year, and new Vera Rubin CPUs expected to bring in around $20 billion in sales by next quarter. The company's software layer is also growing through CUDA, Nemotron, Cosmos, and Isaac.

Broadcom, on the other hand, is focused on custom accelerators, with XPUs shipments making up 73% of its AI semiconductor sales last quarter. However, the company's infrastructure software business generated $8.8 billion in revenue, up 29% year over year.

Hyperscalers are buying both Nvidia and Broadcom solutions, making it tough for investors to choose between the two stocks. Nvidia has expanded its relationship with Amazon Web Services (AWS) to include another 2 million GPUs through fiscal 2029, and is helping fund a 12-gigawatt data center campus that OpenAI is building in Ohio.