Is Broadcom Primed to Take Over Nvidia’s Market Share? 1 Jaw-Dropping Projection Investors Need to See
Nvidia (NASDAQ: NVDA) has long been the undisputed leader in AI computing hardware, dominating the space with its powerful graphics processing units (GPUs).
- But now, Broadcom (NASDAQ: AVGO) is making a bold move to challenge that dominance with its own AI-focused solution: XPUs.
- As both stocks face recent sell-offs, investors are wondering — is this a real shift in power or just hype?
Broadcom’s XPUs aim to redefine AI hardware
While GPUs thrive on flexibility, XPUs are built for precision.
- GPUs process parallel workloads and are incredibly versatile, powering AI training, inference, and general computing across large data center clusters.
- This makes GPUs valuable for scalable performance — but also means resources are sometimes underutilized when workloads don’t need that flexibility.
XPUs, by contrast, are designed for specific AI tasks, sacrificing general-purpose capabilities for maximum efficiency in one area.
- This streamlined focus reduces unnecessary overhead and enables faster, more optimized AI processing.
- Broadcom sees this as the key to unlocking the next level of AI performance — and its projections reflect that optimism.
In 2024, Broadcom earned $12.2 billion in AI revenue, but the company estimates that by 2027, its addressable market for XPUs and AI hardware could hit $60 billion to $90 billion.
- Astonishingly, that growth is being driven by just three major clients, with four more preparing to adopt XPU designs soon.
- As adoption spreads, Broadcom’s market opportunity could grow exponentially, making it a major player in AI infrastructure.
Nvidia is still firmly in the game
Despite Broadcom’s progress, Nvidia’s position isn’t under immediate threat.
- On Broadcom’s recent earnings call, an analyst asked whether an inference-heavy future favors XPUs or GPUs.
- CEO Hock Tan acknowledged that the market isn’t a zero-sum game — GPUs will remain essential for many AI applications.
Many AI workloads, especially general-purpose tasks, are still best suited for Nvidia’s GPU architecture.
- Additionally, cloud clients already using GPUs would face significant friction in switching to XPUs, due to both technical challenges and cost.
- This makes it clear: Nvidia isn’t going anywhere, but Broadcom could carve out a growing share of the AI market as specialized needs expand.
In short, Nvidia’s existing infrastructure, developer ecosystem, and strong customer base ensure it will stay relevant and profitable for years to come.
Valuation makes both stocks worth considering
Interestingly, despite the buzz around AI, both Nvidia and Broadcom are trading at relatively attractive valuations.
- Each stock currently trades below 30 times forward earnings, which is low relative to their historical averages.
- This is especially notable given their strong growth forecasts and dominant roles in the AI supply chain.
Nvidia’s recent dip has likely already priced in near-term concerns, while Broadcom’s upside from XPUs may not be fully reflected yet.
- This creates an interesting opportunity for investors looking to buy into AI infrastructure at a discount.
The bottom line for investors
While Broadcom isn’t about to replace Nvidia outright, its XPU innovation is serious competition and could grab a sizable portion of future AI infrastructure spending.
- Nvidia will remain a dominant force, especially in flexible and cloud-based AI applications.
- But as more companies seek specialized, cost-efficient hardware, Broadcom’s XPU momentum could shift some of the spotlight its way.
At current valuations, both stocks look like compelling buys, with Broadcom offering emerging upside and Nvidia bringing proven strength.
- For long-term investors, this may be a prime moment to add both players to an AI-focused portfolio.
