Nvidia Faces Bigger Core Vulnerability Than Broadcom

Nvidia and Broadcom are two companies that have ridden the AI infrastructure wave to record quarters. However, their earnings calls reveal different bets investors are making.

Nvidia posted $96.22 billion in Q2 FY27 revenue, while Broadcom delivered a record $22.19 billion quarter in June. Their data center segments grew significantly, with Nvidia's networking segment increasing 138% year over year and Broadcom's AI semiconductor line reaching $10.80 billion.

Nvidia faces a threat from its own best customers, who are designing their own silicon to route around the company's expensive GPUs. The four hyperscalers that fund a majority of Nvidia's sales are also investing billions in custom TPUs and MTIA XPUs. This creates an economic pressure point for Nvidia.

Broadcom's exposure is narrower but sharper, with its main risk being that Google widens its sourcing or Meta delays the adoption of Broadcom's MTIA technology. However, Broadcom has a cash cushion from VMware's revenue and a 93% gross margin.