Broadcom has greater upside with strong growth potential in AI and higher valuation compared to AMD.

From Nasdaq: 2025-04-09 15:00:00

Advanced Micro Devices (AMD) and Broadcom (AVGO) are key providers of semiconductor chips powering artificial intelligence (AI) and Generative AI. The Semiconductor Industry Association projects a 19.1% surge in semiconductor sales to $627.6 billion in 2024 and expects double-digit growth in 2025. However, both AMD and AVGO shares have declined due to trade war fears.

AMD boasts a strong portfolio in cloud-data center and AI chip markets, generating over $5 billion in data center AI revenues in 2024. Meanwhile, Broadcom’s application-specific integrated chips (ASICs) and XPUs are driving top-line growth. AVGO expects a 44% jump in AI revenues in Q2 fiscal 2025.

Valuation-wise, AMD is trading at a lower forward 12-month Price/Sales ratio of 3.77X compared to AVGO’s 10.99X. With a Zacks Rank #1 (Strong Buy), Broadcom appears to be a better buy currently, given its expanding AI portfolio and rich partner base. AMD, with a Zacks Rank #3 (Hold), faces challenges in Gaming and Embedded segments.

Both AMD and AVGO have surpassed earnings estimates consistently, but Broadcom’s average surprise of 3.44% is higher than AMD’s 2.32%. AVGO’s fiscal 2025 earnings estimate was revised upwards to $6.60 per share, while AMD’s estimate remains steady at $4.59 per share for 2025.

In conclusion, AVGO seems to be a better buy at the moment, with strong growth potential in its AI portfolio and higher valuation compared to AMD. Investors may find Broadcom’s stock more appealing given its Zacks Rank #1 (Strong Buy) and positive earnings outlook.



Read more at Nasdaq: AMD vs. Broadcom: Which Semiconductor Stock Has Greater Upside?