AMD vs. Broadcom: Which Semiconductor Stock is a Buy Right Now?

Advanced Micro Devices AMD and Broadcom AVGO are key providers of semiconductor chips that power artificial intelligence (AI). While AMD’s EPYC CPU and Instinct GPU power cloud, AI and high-performance computing, Broadcom’s focus is on enabling AI infrastructure through ASICs (custom chips) for hyperscalers, as well as switches, NICs, and interconnects. Both companies are benefiting from higher spending on AI infrastructure. Per CNBC, Alphabet, Meta Platforms, Amazon and Microsoft are expected to spend roughly $700 billion on developing AI infrastructure in 2026 on a combined basis.

So, AMD or Broadcom, which is a better buy in the current scenario? Let’s find out.

AMD’s Strong Portfolio, Rich Partner Base Key Catalyst

AMD outlined its “AI Everywhere, for Everyone” strategy at the CES 2026 with the introduction of Helios rack-scale platform, Instinct MI400 series lineup and Ryzen AI 400 and AI PRO 400 Series processors for AI PCs. AMD expects its data center AI revenues to see a CAGR of more than 80% over the next three to five years. Overall, data center business revenues are expected to see an annual growth rate of more than 60% over the next three to five years.

AMD’s data center AI business prospects are expected to accelerate with the upcoming MI450 series, which forms the crux of the 6-gigawatt (GWs) deal inked between AMD and Meta Platforms. Helios rack-scale architecture is gaining traction, as evident from AMD’s deals with OpenAI, Hewlett Packard Enterprise, Oracle and Lenovo. The launch of the MI500 series, powered by AMD’s CDNA 6 architecture built on advanced 2-nanometer process technology and featuring high-speed HBM4E memory, is expected to drive further growth.

However, AMD’s modest guidance for the first quarter of 2026 is expected to remain an overhang on near-term prospects. The company expects revenues of $9.8 billion (+/-$300 million), which at the mid-point indicates year-over-year growth of approximately 32% but a sequential decline of approximately 5%. AMD is facing stiff competition from the likes of Intel and NVIDIA. The Zacks Consensus Estimate for first-quarter 2026 revenues is pegged at $9.84 billion, suggesting 32.3% growth from the figure reported in the year-ago quarter.

Broadcom Rides on Strong Demand for XPUs

In the first quarter of fiscal 2026, Broadcom’s revenues from custom accelerators (XPUs) jumped 140% year over year. The company’s Semiconductor solutions revenues jumped 52% year over year to $12.52 billion. Semiconductor revenues accounted for 64.8% of net revenues in the reported quarter. The uptick in Semiconductor revenue was driven by the strong AI revenues, which surged 106% year over year. AI networking revenues grew 60% year over year and represented one-third of AI revenues.

The momentum is expected to continue in the current quarter, thanks to a clientele that includes Google, Meta Platforms and Anthropic. The company continues to gain market share in AI networking, driven by Tomahawk 6 switch, as well as Broadcom’s 200G SerDes, which are capturing demand from hyperscalers.

Broadcom expects a positive second-quarter fiscal 2026 performance, with AI revenues of $10.7 billion, suggesting a 140% year-over-year upsurge. AI networking is expected to accelerate in the second quarter of fiscal 2026 and grow to 40% of the total AI revenues. Semiconductor revenues are expected to be $14.8 billion, indicating 76% year-over-year growth. Broadcom expects revenues of $22 billion, indicating 47% year-over-year growth for the second quarter of fiscal 2026. The Zacks Consensus Estimate for revenues is currently pegged at $22.02 billion, suggesting 46.8% growth from the figure reported in the year-ago quarter.

Earnings Estimate Revision Positive for Both AVGO & AMD

The Zacks Consensus Estimate for AVGO’s fiscal 2026 earnings is pegged at $11.12 per share, up 10.6% over the past 30 days, indicating a 63.1% increase over fiscal 2025’s reported figure.

Broadcom Inc. Price and Consensus

Broadcom Inc. price-consensus-chart | Broadcom Inc. Quote

However, the consensus mark for AMD’s 2026 earnings has inched up by a penny to $6.61 per share over the past 30 days, suggesting 58.5% growth over 2025.

Advanced Micro Devices, Inc. Price and Consensus

Advanced Micro Devices, Inc. price-consensus-chart | Advanced Micro Devices, Inc. Quote

AMD Vs. AVGO: Stock Performance & Valuation

Year to date, AMD shares have dropped 6.9% compared with Broadcom’s fall of 8.7%.

AMD and AVGO Performance

Image Source: Zacks Investment Research

Valuation-wise, both AMD and Broadcom are overvalued, as suggested by the Value Score of D.

However, in terms of forward 12-month Price/Sales, AMD shares are trading at 6.7X, lower than AVGO’s 12.64X.

AMD and AVGO Valuation

Image Source: Zacks Investment Research

Conclusion

Broadcom’s expanding AI portfolio, along with a growing clientele, reflects solid top-line growth potential. AMD’s near-term prospects are modest, given the stiff competition from NVIDIA in the Data Center space.

Currently, Broadcom has a Zacks Rank #2 (Buy), making the stock a must-pick compared with AMD, which has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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