Broadcom vs. AMD: Which AI Chip Stock Is the Better Buy?

The AI chip industry has seen explosive growth over the past decade, with both Broadcom (AVGO) and AMD (AMD) outperforming the S&P 500 year to date. While Broadcom focuses on ASICs for tech giants, AMD specializes in GPUs and CPUs. Nvidia's 2009 "Double Down" signal is now flashing strongly for AMD, which is just one-hundredth the size of Nvidia but shows even stronger growth potential.

AMD reported a 50% year-over-year revenue increase in Q2, while Broadcom saw a 48% jump in its fiscal 2026 second quarter. AMD's AI semiconductor revenue, which makes up 58% of its total revenue, is expected to triple year-over-year in the next quarter, driven by the growing agentic AI market. Broadcom, however, has a higher net profit margin (42%) compared to AMD's 19.9%.

Despite AMD's promising growth prospects, Broadcom appears to be the more attractive investment at current valuations, with a lower P/E (70) and PEG (0.47) ratio. Investors should keep an eye on CPU sales, as the demand for CPUs in agentic AI infrastructure may further boost AMD's stock. However, Broadcom's higher profitability may make it a safer bet for now.