Nvidia Outpaces Broadcom in AI Chip Market Growth

Nvidia and Broadcom are two leading players in the AI chip market, but they have different business models and growth prospects. Nvidia's data center segment generated $89 billion in revenue during the second quarter, up 117% from a year earlier. The company's Grace CPUs launched in 2021 have generated more than $5 billion in sales over the last year.

Nvidia is expanding its relationship with Amazon Web Services (AWS) to include another 2 million GPUs through fiscal 2029. The company is also helping fund a 12-gigawatt data center campus that OpenAI is building in Ohio alongside SoftBank Energy. Nvidia's software layer continues to expand through CUDA, Nemotron, Cosmos, and Isaac.

Broadcom, on the other hand, expects its AI chip business to continue doubling through 2028 as the company wins demand from hyperscalers and frontier labs. The company's custom accelerators are the primary growth engine, with XPUs shipments comprising 73% of the company's $16.7 billion in AI semiconductor sales last quarter.

The near-term math between Nvidia and Broadcom is pretty blunt. Nvidia guided current-quarter revenue to $108 billion, with no China data center compute included in this figure. Meanwhile, fiscal 2028 revenue growth is pegged at about 70%, with CFO Colette Kress calling it a 'supply-constrained outlook.'

Nvidia trades around 28 times on a trailing price-to-earnings (P/E) basis and roughly 23 times forward earnings. Broadcom sits closer to a 46 times trailing P/E and about 31 times forward P/E.