Both chipmakers have serious opportunities to capitalize on the AI infrastructure buildout.
It’s going to be a knock-down, drag-out fight to capture segments of the growing hardware market in data centers, artificial intelligence (AI), and cloud computing. Two of the heavyweights competing for market share in the AI chip space are Broadcom (AVGO 3.21%) and Advanced Micro Devices (AMD 2.54%). But which one offers its shareholders the better chance to become rich?
Today’s Change
(-2.54%) $-5.34
Current Price
$204.68
Key Data Points
Market Cap
$333B
Day’s Range
$203.33 – $210.94
52wk Range
$76.48 – $267.08
Volume
65K
Avg Vol
46M
Gross Margin
44.33%
AMD is on a mission
AMD CEO Lisa Su has spent more than a decade chasing after Nvidia. While the $4 trillion giant remains the dominant provider of graphics processing units (GPUs), AMD is focused on taking a portion of its market share.
Image source: Getty Images.
In November, AMD unveiled its strategy to take the lead in the high-performance and AI computing market. Over the next three to five years, the management expects the company to achieve a compound annual growth rate of more than 35%. Within its portfolio, AMD anticipates its data center business will grow by more than 60% annually, and it expects to accrue a market share of over 70% in adaptive computing.
Since Su took over as CEO, AMD’s market capitalization has risen from $2 billion to $350 billion. Her vision and ability to execute should not be overlooked.
In the third quarter, the chipmaker reported year-over-year revenue growth of 40%. AMD’s gross margin also increased to 52%. As the AI revolution continues, AMD will be ready to capitalize.
Broadcom remains strong and steady
Broadcom boasts strong and diversified revenue streams. From semiconductors to software, Broadcom’s cash-flow stability is impressive. It reported $7.4 billion in free cash flow in its fiscal 2025 fourth quarter (which ended Nov. 2). It also pays a quarterly dividend of $0.65 per share.
Today’s Change
(-3.21%) $-11.02
Current Price
$332.48
Key Data Points
Market Cap
$1.6T
Day’s Range
$330.50 – $343.68
52wk Range
$138.10 – $414.61
Volume
37K
Avg Vol
29M
Gross Margin
64.71%
Dividend Yield
0.73%
The company’s fundamentals are solid, but while its year-over-year net revenue growth of 28% last quarter was impressive, it was not quite as compelling as AMD’s trajectory.
Which will make investors richer?
Both Broadcom and AMD are great companies with bright futures. However, Broadcom is a more mature business than AMD, and thus, its growth is a bit slower. It looks to be the more conservative and lower-volatility play. AMD, however, would be my pick for investors seeking higher returns as the company continues to focus on chipping away at Nvidia’s lead in the AI accelerator space.
Catie Hogan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices and Nvidia. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.
