Why NVIDIA, AMD, and Broadcom Are Bargains in the AI Gold Rush

Henry RiversMonday, May 19, 2025 12:25 pm ET
18min read

The semiconductor sector has been the poster child of the market’s recent panic—a panic fueled by fears of trade wars, AI overvaluation, and China-related supply chain risks. Yet beneath the noise, NVIDIA (NVDA), AMD (AMD), and Broadcom (AVGO) are sitting on $80 billion in combined AI revenue growth and secular tailwinds that make their current price declines a historic buying opportunity. Here’s why the sell-off is overdone, and why these stocks are primed for a rebound.

The Sell-Off: Fear vs. Fundamentals
The sell-off in these stocks has been sentiment-driven, not fundamental. Take NVIDIA: its shares plunged 22% in April 2025 amid fears of U.S.-China trade restrictions and skepticism over AI’s economic returns. Yet just weeks later, a $1.5 billion deal with Saudi Arabia’s Humain—supplying 18,000 AI chips for a 500-megawatt data center—showed the sector’s resilience. The stock surged 6% in a single day, a preview of how AI megadeals can reverse momentum.

The same dynamic applies to AMD and Broadcom. AMD’s 4% jump on its $10 billion Humain partnership and Broadcom’s 9% post-earnings rally after reporting $4.1 billion in AI revenue (up 77% YoY) highlight how real-world demand is overpowering macro noise.

Valuation Discounts: Buying at a Discount to AI Growth
Let’s cut through the panic and look at the numbers:

  1. NVIDIA:
  2. AI Revenue CAGR: 44% through 2025, with projections of $8.5 billion in AI revenue by mid-2025.
  3. Dividend Stability: A $0.01/ share quarterly dividend (post-split) signals financial confidence, despite a 105% payout ratio that’s manageable given its $130.5B FY2025 revenue run rate.
  4. Current Discount: Down 30% from 2024 highs, yet its $3.2 trillion market cap still lags Apple and Microsoft—despite AI’s stratospheric growth.

  5. AMD:

  6. AI Growth: The $10B Humain deal offsets China-related $1.5B in lost revenue, while its EPYC server chips are powering 80% of new AI data centers.
  7. Dividend Policy: While AMD doesn’t pay dividends, its $20B share buyback program (announced in 2024) ensures capital returns, and its valuation at 14x forward P/E is a steal for a company with 47% software revenue growth.

  8. Broadcom:

  9. AI Dominance: Its $60–$90B addressable market for AI chips by 2027 and $6B in free cash flow (Q1 2025) underscore its ability to weather macro storms.
  10. Valuation: Despite a 28x P/E, its $4.4B AI revenue guidance for Q2 justifies the premium—especially as competitors like Marvell underperform.

Why Now? Q2 Earnings Are the Catalyst

The market’s fear is forward-looking, but these companies’ Q2 2025 earnings (beginning May 28) will likely quell doubts. Consider:
- NVIDIA’s Grace Blackwell GPU shipments are ramping ahead of expectations, while its Stargate Project with Saudi Arabia could unlock $15–20B in multiyear revenue.
- Broadcom’s VMware software division (now growing 47% organically) and $10B in AI-driven cloud contracts are underappreciated in its valuation.
- AMD’s Ryzen AI chips are outperforming Intel’s offerings, with 29% market share gains in data centers in Q1 — a trend that’s accelerating.

Historical Rebounds: Panic vs. Reality

The sector’s post-panic rebounds are legendary. When the U.S. imposed AI chip restrictions in 2024, NVIDIA’s stock dropped 18% in a week—only to rebound 29% within three months as partnerships like Humain emerged. The current sell-off is no different. The U.S.-China tariff truce (suspending duties for 90 days) has already stabilized supply chains, and AI demand remains $100B+ annually.

Act Now Before the Crowd Catches On

The panic is fading, but the opportunity is still here. These stocks are trading at 20–30% discounts to their AI-driven growth trajectories, and their $150B+ in combined free cash flow (projected by 2026) ensures they’ll outlast macro headwinds.

Final Call:
- Buy NVIDIA (NVDA): For its AI leadership and Saudi partnerships.
- Buy AMD (AMD): For its software-hardware synergy and underappreciated AI growth.
- Buy Broadcom (AVGO): For its VMware turnaround and AI chip dominance.

The market’s fear is misplaced. These are buy now, celebrate later plays—especially with Q2 earnings around the corner.

Act fast—this is the last chance to buy AI’s crown jewels at a discount.