Nvidia and Broadcom: A Year After Their Splits – Are These AI Powerhouses Still Buy Opportunities?

The AI revolution is reshaping global markets, and semiconductor giants like Nvidia (NVDA) and Broadcom (AVGO) have emerged as key beneficiaries. Both companies executed 10-for-1 stock splits in 2024—Nvidia on June 10 and Broadcom on July 15—to make their shares more accessible to retail investors and employees. A year later, as the AI infrastructure boom accelerates, the question remains: Are these post-split tech darlings still compelling investments?

Post-Split Performance: Volatility vs. Consistency

Nvidia's stock has exhibited a rollercoaster year. Despite a 22% pullback in early April 2025, the company's fundamentals remain robust. Revenue surged 36%, net income grew 37%, and diluted earnings per share (EPS) rose 38% year-over-year. However, its share price has largely traded sideways since the split, with a P/E ratio of 40x—still low compared to its five-year average of 80x. This suggests the stock may be undervalued relative to its earnings power, but investors must weigh this against the risk of mean reversion in a volatile sector.

Broadcom, in contrast, has posted a more consistent 18% gain since its split. While it too faced a 45% correction in early 2025, the stock has rebounded to trade 20% below its 52-week high. Its Q2 2025 revenue growth—driven by AI semiconductors and infrastructure software—surpassed expectations, and a $10 billion share repurchase program underscores management's confidence. Analysts project 36% earnings growth for 2025 and 19% for 2026, positioning Broadcom as a stable long-term play.

Valuation Trends: Expensive, But for a Reason

Nvidia's trailing price-to-sales (P/S) ratio of 40 is eye-popping, mirroring levels seen during the dot-com bubble. Yet this valuation is justified by its 92% market share in data center GPUs and the Blackwell architecture's $11 billion first-quarter revenue. The company recently became the first to reach a $4 trillion market cap, but some analysts warn that its sheer size could limit future growth.

Broadcom's P/S ratio of 19 is more reasonable, albeit elevated compared to its historical 5–7x range. Its diversified business model—combining semiconductors, software, and networking—provides a buffer against sector-specific risks. With 75% institutional ownership and a history of beating earnings estimates in 38 of 39 quarters since 2015, the stock offers a blend of stability and growth potential.

AI Infrastructure Demand: A $6.7 Trillion Catalyst

The AI infrastructure market is set to explode. According to McKinsey, global data center spending will hit $6.7 trillion by 2030, with $5 trillion tied to AI processing power. Both Nvidia and Broadcom are poised to capitalize:
- Nvidia dominates AI GPU sales and is pioneering the Blackwell-to-Rubin architecture transition. Its CUDA platform remains the industry standard, and partnerships with cloud providers ensure steady demand.
- Broadcom is challenging Nvidia's dominance through custom XPUs and the Tomahawk 6 switch, which enables 102 Tb/s throughput for hyperscalers. Its UALink Consortium project aims to create an open interconnect standard, directly competing with Nvidia's NVLink.

Investment Outlook: Short-Term vs. Long-Term

Nvidia's stock appears more attractive for short-term investors. Analysts project a potential 15% upside, driven by its leadership in AI training and inference. However, its valuation leaves little room for error, and competition from AMD and Broadcom could intensify.

Broadcom, meanwhile, offers a more conservative bet. Its strong cash flow, diversified revenue streams, and strategic moves in AI networking make it a defensive play in an otherwise volatile sector. While its earnings growth is projected to slow to 19% in 2026, the company's ability to grow into its valuation and its $10 billion share buyback program provide a margin of safety.

Final Verdict

For investors with a high-risk tolerance, Nvidia remains a compelling bet on the AI revolution, albeit with a premium price tag. However, Broadcom may offer a more balanced opportunity, combining long-term growth with relative stability. Both companies are essential to the AI infrastructure ecosystem, but their differing valuations and strategies suggest distinct roles in a diversified portfolio. As the $2 trillion cloud computing market unfolds, the key will be to align investments with one's time horizon and risk appetite.