Nvidia's SpaceX Deal May Not Be Enough to Outshine AMD and Broadcom

Nvidia is set to benefit from its partnership with SpaceX after CEO Elon Musk announced that the company's chips will be exclusively used for all AI model training. However, some analysts argue that Advanced Micro Devices (AMD) and Broadcom are better buys due to their strong positions in the inference market.

Inference refers to the process of using pre-trained models on specific data sets, which is growing faster than AI model training. According to Bloomberg Intelligence, the inference market will reach $1.3 trillion by 2032, doubling the size of the AI training segment over the same period.

AMD's GPUs are cheaper than Nvidia's and have improved significantly in recent years, making them well-suited for inference tasks. The company has also partnered with Cerebras to develop high-end inference chips and has secured multi-year deals with OpenAI and Meta Platforms worth hundreds of billions of dollars.

Broadcom is also poised to benefit from the growth in the inference market, having helped customers design custom AI chips for companies such as Alphabet. The company's revenue from AI is expected to double next fiscal year to $115 billion and then again to $230 billion in 2028.