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Investors are looking at alternative options to Nvidia (NVDA) as the AI rally has started to dissipate. NVDA was the biggest beneficiary of this rally and it is now leading the way down as macroeconomic data, like unemployment, have missed bullish estimates, and AI companies have failed to make meaningful recent breakthroughs.
Broadcom (AVGO) is the best option if you are looking for an Nvidia alternative.
Most chip companies that competed with Nvidia failed against its moat in the AI chips sector. Instead, they have been beaten down significantly. AVGO is a special case since it has delivered multibagger gains since 2022 and even crossed the $1 trillion market cap threshold in December. After a decline, the market cap is down to $916.7 billion, but signs of a recovery are again on the horizon.
Broadcom Succeeded Where Nvidia Failed
Broadcom trounced earnings estimates in its Q1 2025 report. Revenue came in at $14.92 billion, up 25% year-over-year, and surpassing the Wall Street consensus estimate of $14.61 billion.
AI revenue also came in at $4.1 billion and grew at 77% year-over-year. It exceeded forecasts by $300 million, and adjusted EBITDA also rose 41% to $10.1 billion. Operating margin came in at 66%.
On top of that, Broadcom projected $14.9 billion in Q2 2025 revenue, above expectations of $14.76 billion. AI revenue is expected to grow 44% year-over-year to $4.4 billion in Q2.
The company estimates that its serviceable addressable market (SAM) for AI processors and networking chips will grow to between $60 billion and $90 billion by fiscal 2027.
Now compare these figures to those of Nvidia’s. Nvidia did beat earnings expectations, but it didn’t continue the trend of doing so with eye-popping figures.
Broadcom vs. Nvidia: Can Broadcom Eat Nvidia’s Lunch?
Hyperscale customers are increasingly shifting toward custom AI chip solutions to reduce costs and optimize performance. Broadcom specializes here, and this could erode the reliance AI companies have on Nvidia. They could instead start shifting to Broadcom.
Broadcom has already secured partnerships with major hyperscale customers like Alphabet (GOOG), Meta (META), and ByteDance to develop custom AI chips. Alphabet, for example, worked with Broadcom to design its Trillium tensor-processing units (TPUs).
The trend of hyperscalers diversifying away from Nvidia could continue and benefit Broadcom greatly down the line. Broadcom’s application-specific integrated circuits (ASICs) are designed for high-volume AI tasks at a lower cost than Nvidia’s GPUs.
Still, Broadcom is unlikely to eat Nvidia’s lunch or start taking meaningful amounts of Nvidia’s market share. Nvidia’s hardware and software (like CUDA libraries) go hand in hand and create vendor lock-in, so you’re unlikely to see a big customer exodus from Nvidia to Broadcom.
Instead, the biggest negative catalyst would be a slowdown in the AI sector, which would hurt both companies, but Broadcom would be harmed a bit less.
AVGO Stock vs. NVDA Stock: Which One Is the Better Buy?
Both companies are more or less dependent on the success of the AI narrative. If you think that the AI rally will die down and AI stocks will pull back, you should be cautious of AVGO and NVDA for now. Conversely, if you think AI and semiconductor stocks are going to recover, it’s a good idea to buy both.
NVDA trades at 38.7 times earnings TTM, whereas AVGO trades at 39.5 times earnings TTM. Despite not posting blockbuster growth, Nvidia still has better fundamentals, so you’re paying a much bigger premium for Broadcom.
NVDA has a mean price target of $177.59. This implies roughly 57% upside.
AVGO’s mean price target of $249.83 implies 26% upside.
Despite AVGO performing better than NVDA recently, the long-term outlook is still better for Nvidia. A company beating analyst estimates by slightly bigger margins isn’t enough reason to dump one for the other.
Nvidia has better financials, growth (77.94% top-line growth in Q4), and a much cleaner balance sheet. Broadcom has $66.3 billion in long-term debt and $9.3 billion in cash, compared to $8.5 billion in long-term debt and $8.6 billion in cash for Nvidia.
As such, NVDA should still have the most weight in an AI portfolio.
