The Financial Times issued an article stating that although Nvidia is at its peak in today's chip industry, its rival Broadcom has achieved better investment returns in the past year. Broadcom is more favored by investors and has gradually gained an advantage in the data center field and stock pickers' investment portfolios.The Financial Times stated that Broadcom’s response to the powerful Nvidia was “scorn”.

In the past three months,AI-related businesses account for more than a quarter of Broadcom’s revenue, while this ratio was basically zero a few years ago.By June, the company expects that proportion to reach 30%, with annual growth exceeding 40%.

Analysts are happy to make predictions based on these bright data. They estimate,By 2027, Broadcom's total sales will exceed US$80 billion, 60% higher than in 2024. According to data from VisibleAlpha, sales of artificial intelligence equipment are expected to be160% increase. In Broadcom’s traditional business,For example, in the broadband chip business, analysts expect no growth.

Investing $1 in each of the two chip giants would be worth today

The Financial Times said that Nvidia and Broadcom may be passengers on the AI ​​boom train, but they are in different compartments.NVIDIA's off-the-shelf chips, known as graphics processing units (GPUs), represent the current state of the art. Broadcom, on the other hand, helps so-called hyperscale data center operators with more specific tasks.manufacturing chips, this type of chip is often called XPU. Google is one of its three largest customers.Broadcom CEO Hock Tan hinted on Thursday that four more customers might join.

The trade-offs are not simple. Morgan Stanley noted that custom chips can be cheaper, but not always, when the cost of communication between chips is factored in, for example. Mizuho Securities said,Custom chips could account for a fifth of the $350 billion market for so-called artificial intelligence accelerators by 2027, but companies such as Marvell Electronics, MediaTek and Alchip also want a piece of the pie.

What Broadcom has is full of ambition. Since 2016,Chen Fuyang has conducted nearly US$100 billion in M&A transactions. This amount would have doubled if the 2018 acquisition of rival Qualcomm had not been blocked during Trump's first administration.

Broadcom and Nvidia swap valuation positions

In December last year, Chen Fuyang told investors,Its top three customers will spend as much as $90 billion on AI-related investments by 2027.This is partly a hype move because it's unclear how much of that will go to Broadcom. The Broadcom CEO hinted that the next four customers may eventually invest as much money.

Investors recognize thisOptimistic expectations. Broadcom is valued at 15 times this year's expected sales, which is double its 10-year average, according to Refinitiv data. Broadcom shares are up 16% since the U.S. election in November; Nvidia shares are down about the same amount.In the data center space, both companies have room to grow. Broadcom is gaining ground in stock pickers' portfolios.