AMD vs. Broadcom: Who Will Dominate the Next Decade?
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Feb 20 2026
0mins
Source: Fool
- AMD's Strong Performance: In 2025, AMD achieved record full-year revenue of $34.6 billion with a gross margin of 50% and earnings per share of $2.65, and it anticipates a 32% growth in Q1 2026 with a non-GAAP gross margin of 55%, indicating robust market demand and sustained growth potential.
- Broadcom's Robust Outlook: Similarly, Broadcom posted record revenues in 2025 and is expected to continue this momentum into Q1 2026, boasting an AI-specific backlog of approximately $73 billion, highlighting its strong market position and future growth prospects in the AI sector.
- Valuation Challenges: Both AMD and Broadcom have high stock prices, with AMD's P/E ratio at 79 and Broadcom's at 68, reflecting market expectations for future growth but also potential valuation pressures, necessitating cautious risk assessment by investors.
- Competitive Landscape: Broadcom's diversified portfolio across custom chips, networking, and enterprise software provides multiple growth engines, positioning it to dominate the next decade, while AMD is also actively entering the AI market, indicating an intensifying competition.
Trade with 70% Backtested Accuracy
Stop guessing "Should I Buy AVGO?" and start using high-conviction signals backed by rigorous historical data.
Sign up today to access powerful investing tools and make smarter, data-driven decisions.
Analyst Views on AVGO
Wall Street analysts forecast AVGO stock price to rise
30 Analyst Rating
29 Buy
1 Hold
0 Sell
Strong Buy
Current: 414.570
Low
370.00
Averages
457.75
High
525.00
Current: 414.570
Low
370.00
Averages
457.75
High
525.00
About AVGO
Broadcom Inc. is a global technology firm that designs, develops, and supplies a range of semiconductors, enterprise software and security solutions. The Company operates through two segments: semiconductor solutions and infrastructure software. Its semiconductor solutions segment includes all of its product lines and intellectual property (IP) licensing. It provides a variety of radio frequency semiconductor devices, wireless connectivity solutions, custom touch controllers, and inductive charging solutions for mobile applications. Its infrastructure software segment includes its private and hybrid cloud, application development and delivery, software-defined edge, application networking and security, mainframe, distributed and cybersecurity solutions, and its FC SAN business. It provides a portfolio of software solutions that enable customers to plan, develop, automate, manage and secure applications across mainframe, distributed, mobile and cloud platforms.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Broadcom's AI Chip Sales Surge 140% Amid Strong Demand
- Custom AI Chip Sales Surge: Broadcom's custom AI application-specific integrated circuits (ASICs) saw a 140% sales increase in Q1 2026, reaching $8.4 billion, driven by expanded partnerships with Alphabet, Meta, Anthropic, and OpenAI, showcasing the company's strong competitive position in the rapidly growing AI market.
- Data Center Networking Revenue Boom: The company's data center networking revenue jumped 60% in the latest quarter to $2.8 billion, accounting for one-third of total AI sales, with expectations for this share to rise to 40% in Q2, reflecting Broadcom's critical role in data center expansion.
- Shareholder Returns and Profitability: Broadcom returned $3.1 billion to shareholders in Q1, with a dividend of $0.65 per share, and has raised its dividend for 15 consecutive years, demonstrating strong cash flow and a 77% gross margin that allows for shareholder returns alongside continued R&D investment.
- Future Growth Potential: Management estimates that Broadcom's AI chip revenue will reach $100 billion by 2027, and with ongoing investments and new contracts in the AI sector, the company is well-positioned to benefit from the rapid growth of the AI market in the coming years.
See More
Broadcom Capitalizes on AI Trends with Strong Growth
- Surge in AI Processor Demand: Broadcom's custom AI processors saw a 140% sales increase in Q1 2026, reaching $8.4 billion, primarily driven by expanded partnerships with Google and Meta, showcasing its strong competitive position in the AI market.
- Growth in Networking Systems Sales: The company's AI networking revenue rose 60% in the latest quarter to $2.8 billion, accounting for one-third of its AI sales, with expectations that networking will make up 40% of AI revenue in Q2, reflecting robust demand from data center expansions.
- Consistent Dividend Returns: Broadcom returned $3.1 billion to shareholders in Q1, with a dividend of $0.65 per share, and has increased its dividend for 15 consecutive years, demonstrating its high profitability and stable cash flow.
- Stock Buyback Program: The company repurchased $7.8 billion in shares in Q1 and authorized an additional $10 billion buyback program, indicating its ability to effectively reward shareholders while maintaining growth.
See More
Walmart and Costco's Recession-Proof Advantages
- Operational Efficiency Analysis: Walmart and Costco have operating margins of 4.2% and 3.8%, respectively, and despite these low margins, both companies maintain stable growth by leveraging massive sales volumes and efficient supply chains to deliver customer value amid economic pressures.
- Private Label Competitiveness: Walmart's Great Value and Costco's Kirkland Signature private labels undercut name brands on price, catering to consumers' demand for value during economic downturns, thereby further solidifying their market share.
- E-commerce and Service Expansion: Walmart is rapidly expanding its e-commerce through Walmart+ while offering services like fuel, auto care, and pharmacy, enhancing customer loyalty and driving revenue growth despite challenges in the overall retail market.
- Valuation and Investment Recommendation: With Walmart's and Costco's P/E ratios at 44.4 and 54.6, indicating high valuations, Walmart's advantages in AI application and dividend growth make it a more attractive investment choice, especially in the current market environment.
See More
Analysis of Walmart and Costco's Market Performance
- Declining Dividend Yields: Both Walmart and Costco have dividend yields below 1%, indicating that while they perform steadily in the market, investors may face insufficient returns amid an economic slowdown, which could deter risk-averse investors.
- Low Operating Margins: With operating margins of 4.2% for Walmart and 3.8% for Costco, both companies convert only about $0.04 of every sales dollar into operating income; however, they offset this with massive sales volumes and efficient supply chains, maintaining competitive advantages.
- High Valuation Risks: Walmart's price-to-earnings ratio stands at 44.4, while Costco's is even higher at 54.6, suggesting that the market has fully recognized their competitive advantages, yet such high valuations may expose investors to significant risks in the current market environment.
- AI Technology Adoption: Walmart is actively leveraging artificial intelligence across its operations and customer experience, which is expected to enhance its operational efficiency and market competitiveness, while Costco continues to focus on brand value and customer loyalty, despite both companies appearing overpriced in the stock market.
See More
Nvidia, AMD, and Broadcom Compete in AI Market
- Nvidia's Market Leadership: Nvidia continues to dominate the large language model (LLM) training market, leveraging its CUDA software platform that has become the foundation for most AI code, ensuring a wide moat in AI infrastructure, with projected CPU revenues hitting $20 billion this year.
- AMD's Growth Potential: AMD has made significant strides in the inference market with chip designs that allow for higher memory configurations, expected to drive GPU demand through partnerships with Anthropic, while also holding a strong position in the data center CPU market, enhancing its competitive edge.
- Broadcom's Custom Chip Business: Broadcom leads in ASIC technology, having assisted Alphabet in developing TPUs, with expectations of exceeding $100 billion in custom chip revenue by fiscal 2027, indicating robust growth potential in its data center networking business.
- Investment Opportunities in AI Market: With the rapid growth of the AI market, Nvidia, AMD, and Broadcom all exhibit strong growth drivers, particularly AMD's opportunities in inference and agentic AI, which may attract investor attention.
See More
Intensifying Competition in AI Infrastructure Market
- Market Leadership: Nvidia maintains its dominance in large language model (LLM) training with a market share of 74.15%, leveraging its CUDA software platform to solidify its competitive edge, and is projected to achieve $20 billion in CPU revenue this year, showcasing its comprehensive positioning in AI infrastructure.
- AMD's Rise: AMD is successfully entering the inference market through its chip design and improvements in ROCm software, with expectations of collaboration with Anthropic to drive growth using its latest GPUs, while also holding a significant position in the data center CPU market, indicating potential for substantial revenue growth.
- Broadcom's Custom Chip Business: Broadcom, leveraging its ASIC technology, has assisted Alphabet in developing TPUs and is expected to generate over $100 billion in ASIC revenue by fiscal 2027, highlighting its strong growth potential in both data center networking and custom chip markets.
- Investment Recommendation: Among the current AI stocks, Nvidia, AMD, and Broadcom all present investment value, particularly AMD with its enormous opportunities in inference and agentic AI markets, making it the top stock to buy, reflecting the market's strong preference for growth.
See More
Broadcom's AI Chip Sales Surge 140% Amid Strong Demand
- Custom AI Chip Sales Surge: Broadcom's custom AI application-specific integrated circuits (ASICs) saw a 140% sales increase in Q1 2026, reaching $8.4 billion, driven by expanded partnerships with Alphabet, Meta, Anthropic, and OpenAI, showcasing the company's strong competitive position in the rapidly growing AI market.
- Data Center Networking Revenue Boom: The company's data center networking revenue jumped 60% in the latest quarter to $2.8 billion, accounting for one-third of total AI sales, with expectations for this share to rise to 40% in Q2, reflecting Broadcom's critical role in data center expansion.
- Shareholder Returns and Profitability: Broadcom returned $3.1 billion to shareholders in Q1, with a dividend of $0.65 per share, and has raised its dividend for 15 consecutive years, demonstrating strong cash flow and a 77% gross margin that allows for shareholder returns alongside continued R&D investment.
- Future Growth Potential: Management estimates that Broadcom's AI chip revenue will reach $100 billion by 2027, and with ongoing investments and new contracts in the AI sector, the company is well-positioned to benefit from the rapid growth of the AI market in the coming years.
See More
Broadcom Capitalizes on AI Trends with Strong Growth
- Surge in AI Processor Demand: Broadcom's custom AI processors saw a 140% sales increase in Q1 2026, reaching $8.4 billion, primarily driven by expanded partnerships with Google and Meta, showcasing its strong competitive position in the AI market.
- Growth in Networking Systems Sales: The company's AI networking revenue rose 60% in the latest quarter to $2.8 billion, accounting for one-third of its AI sales, with expectations that networking will make up 40% of AI revenue in Q2, reflecting robust demand from data center expansions.
- Consistent Dividend Returns: Broadcom returned $3.1 billion to shareholders in Q1, with a dividend of $0.65 per share, and has increased its dividend for 15 consecutive years, demonstrating its high profitability and stable cash flow.
- Stock Buyback Program: The company repurchased $7.8 billion in shares in Q1 and authorized an additional $10 billion buyback program, indicating its ability to effectively reward shareholders while maintaining growth.
See More
Walmart and Costco's Recession-Proof Advantages
- Operational Efficiency Analysis: Walmart and Costco have operating margins of 4.2% and 3.8%, respectively, and despite these low margins, both companies maintain stable growth by leveraging massive sales volumes and efficient supply chains to deliver customer value amid economic pressures.
- Private Label Competitiveness: Walmart's Great Value and Costco's Kirkland Signature private labels undercut name brands on price, catering to consumers' demand for value during economic downturns, thereby further solidifying their market share.
- E-commerce and Service Expansion: Walmart is rapidly expanding its e-commerce through Walmart+ while offering services like fuel, auto care, and pharmacy, enhancing customer loyalty and driving revenue growth despite challenges in the overall retail market.
- Valuation and Investment Recommendation: With Walmart's and Costco's P/E ratios at 44.4 and 54.6, indicating high valuations, Walmart's advantages in AI application and dividend growth make it a more attractive investment choice, especially in the current market environment.
See More
Analysis of Walmart and Costco's Market Performance
- Declining Dividend Yields: Both Walmart and Costco have dividend yields below 1%, indicating that while they perform steadily in the market, investors may face insufficient returns amid an economic slowdown, which could deter risk-averse investors.
- Low Operating Margins: With operating margins of 4.2% for Walmart and 3.8% for Costco, both companies convert only about $0.04 of every sales dollar into operating income; however, they offset this with massive sales volumes and efficient supply chains, maintaining competitive advantages.
- High Valuation Risks: Walmart's price-to-earnings ratio stands at 44.4, while Costco's is even higher at 54.6, suggesting that the market has fully recognized their competitive advantages, yet such high valuations may expose investors to significant risks in the current market environment.
- AI Technology Adoption: Walmart is actively leveraging artificial intelligence across its operations and customer experience, which is expected to enhance its operational efficiency and market competitiveness, while Costco continues to focus on brand value and customer loyalty, despite both companies appearing overpriced in the stock market.
See More
Nvidia, AMD, and Broadcom Compete in AI Market
- Nvidia's Market Leadership: Nvidia continues to dominate the large language model (LLM) training market, leveraging its CUDA software platform that has become the foundation for most AI code, ensuring a wide moat in AI infrastructure, with projected CPU revenues hitting $20 billion this year.
- AMD's Growth Potential: AMD has made significant strides in the inference market with chip designs that allow for higher memory configurations, expected to drive GPU demand through partnerships with Anthropic, while also holding a strong position in the data center CPU market, enhancing its competitive edge.
- Broadcom's Custom Chip Business: Broadcom leads in ASIC technology, having assisted Alphabet in developing TPUs, with expectations of exceeding $100 billion in custom chip revenue by fiscal 2027, indicating robust growth potential in its data center networking business.
- Investment Opportunities in AI Market: With the rapid growth of the AI market, Nvidia, AMD, and Broadcom all exhibit strong growth drivers, particularly AMD's opportunities in inference and agentic AI, which may attract investor attention.
See More
Intensifying Competition in AI Infrastructure Market
- Market Leadership: Nvidia maintains its dominance in large language model (LLM) training with a market share of 74.15%, leveraging its CUDA software platform to solidify its competitive edge, and is projected to achieve $20 billion in CPU revenue this year, showcasing its comprehensive positioning in AI infrastructure.
- AMD's Rise: AMD is successfully entering the inference market through its chip design and improvements in ROCm software, with expectations of collaboration with Anthropic to drive growth using its latest GPUs, while also holding a significant position in the data center CPU market, indicating potential for substantial revenue growth.
- Broadcom's Custom Chip Business: Broadcom, leveraging its ASIC technology, has assisted Alphabet in developing TPUs and is expected to generate over $100 billion in ASIC revenue by fiscal 2027, highlighting its strong growth potential in both data center networking and custom chip markets.
- Investment Recommendation: Among the current AI stocks, Nvidia, AMD, and Broadcom all present investment value, particularly AMD with its enormous opportunities in inference and agentic AI markets, making it the top stock to buy, reflecting the market's strong preference for growth.
See More
