Broadcom

Nvidia has been the face of the artificial intelligence (AI) race since it began in 2023. However, there’s another competitor that’s looking to take over Nvidia’s leadership role: Broadcom (AVGO -0.26%).

While Broadcom has its fingers in many parts of tech, its most promising segment is its AI chip business, and it’s growing rapidly. Broadcom is already a $1.6 trillion company, but could it find its way near the top and become the next Nvidia? Let’s take a look.

Broadcom’s custom AI accelerators are a GPU alternative

Broadcom’s AI semiconductor division gets its revenue from two primary sources: Custom AI accelerators and connectivity switches. Broadcom’s connectivity switches, like the Tomahawk3, are used in data centers to stitch workloads back together after they have been split up to be processed among multiple computing units. This makes Broadcom’s connectivity switches vital for data centers, regardless of what computing unit is being used.

This product line has seen strong growth, but it’s nothing compared to the potential of Broadcom’s custom AI accelerator chips, which it calls XPUs. Broadcom’s XPUs are designed in collaboration with end users to ensure the architecture is suited for the workloads it will see. By designing a custom chip around a specific workload for each client, XPUs can have greater performance than Nvidia’s graphics processing units (GPUs). Additionally, because the end user is working directly with Broadcom, these units are far cheaper than anything from Nvidia.

The combination of better performance at a lower cost is a no-brainer, and that’s why companies like Alphabet and Meta Platforms have allegedly (Broadcom doesn’t reveal who its XPU clients are) invested heavily in their XPUs. Additionally, it announced that a new client placed an order for $10 billion worth of XPUs. This has been linked to OpenAI, the creator of ChatGPT, giving Broadcom the status of providing computing units for nearly all of the top generative AI models.

So, is Broadcom set to replace Nvidia?

Nvidia still has more to gain from the AI buildout than Broadcom does

The reality is that these AI hyperscalers know what their AI workloads will look like. However, cloud infrastructure companies, like Alphabet, Amazon, and Microsoft, must continue purchasing Nvidia GPUs because clients want flexibility. Furthermore, if one of the AI hyperscalers wants to try something different to run workloads in a new way, they’ll need the flexibility of a GPU.

So, Nvidia isn’t going away, but I’d expect Broadcom’s chips to become far more popular over the next few years. We’re already seeing that now, as Nvidia’s data center revenue rose 56% year over year while Broadcom’s AI semiconductor revenue rose 63%. Broadcom will need to maintain that quicker growth pace if it is to rise to be in true competition with Nvidia, but with how rapidly demand for XPUs is growing, I wouldn’t be surprised if that’s the case.

During its third-quarter fiscal year 2025 (ending Aug. 3) announcement, Broadcom predicted that it would generate $6.2 billion in AI semiconductor revenue during the fourth quarter, up from $5.2 billion in Q3. That’s rapid quarter-over-quarter growth, but it is still slower than Nvidia’s peak growth pace last year.

Time will tell how well Broadcom’s XPUs do, but I’d wager that Broadcom’s AI semiconductor division will grow faster than Nvidia for the foreseeable future. However, because Broadcom is far more diversified than Nvidia, it won’t deliver the same explosive growth. Despite its AI semiconductor revenue growing at a 63% pace, Broadcom’s overall revenue increased at a 22% pace during Q3. Nearly all of Nvidia’s revenue comes from data centers, and its 56% data center growth pace was identical to its overall revenue growth rate.

As a result, Nvidia still looks like the better stock pick here. It’s more exposed to the AI data center buildout trend, as long as that spending holds up. With AI hyperscalers all announcing record capital expenditure for 2026, I think it’s safe to assume that this trend will continue. Although Broadcom is an excellent pick, I still think Nvidia will outperform it through 2026.

Broadcom (AVGO -0.06%) and Oracle (ORCL 1.72%) have been two of the best-performing mega-cap growth stocks in 2025. As of this writing, Broadcom is up 19% since reporting earnings on Sept. 4, and Oracle soared 36% on Sept. 10 in response to its own blowout earnings and guidance.

Broadcom is getting closer to reaching a $2 trillion in market cap, and Oracle is knocking on the door of $1 trillion. Yet, you won’t find either of these stocks in the “Magnificent Seven,” which only includes Nvidia (NVDA -0.20%), Microsoft (MSFT 0.73%), Apple (AAPL 2.98%), Amazon (AMZN 1.04%), Alphabet (GOOG 0.69%) (GOOGL 0.65%), Meta Platforms (META -1.32%), and Tesla (TSLA 1.48%).

The “Ten Titans” corrects that error by adding Broadcom, Oracle, and Netflix (NFLX 1.38%) to the group. Combined, these 10 growth stocks now make up 39.1% of the S&P 500 (^GSPC 0.28%).

Here’s how the Ten Titans have disrupted the stock market in just a few years and why their dominance in the S&P 500 can still impact your investment portfolio, even if you don’t own any of the Ten Titans outright.

Image source: Getty Images.

A lot has changed in less than three years

The S&P 500 is up a staggering 70% since the start of 2023, and a big reason for that is artificial intelligence (AI). Specifically, a few major companies are profiting from AI through semiconductors and associated networking hardware, software infrastructure, cloud computing, automation, and efficiency improvements.

The Ten Titans encapsulate this theme. The group is now double the market cap of China’s entire stock market and is largely responsible for moving the S&P 500 in recent years.

At the end of 2022, the Ten Titans made up 23.3% of the S&P 500. But since then, many of the Titans have increased in value several-fold, with Nvidia and Broadcom leading the pack.

Data by YCharts.

The Ten Titans’ combination of size and rapid gains has redefined the structure of the S&P 500. Here’s a look at each company’s weight in the S&P 500 as of this writing.

Data source: Slickcharts.

Oracle’s surge on Sept. 10 briefly pole-vaulted it to become the tenth-largest company by market cap. At that time, the nine largest names in the S&P 500 were all tech companies — a far cry from the days when the most valuable U.S. companies were from the oil and gas, consumer staples, financials, and industrial sectors.

The Ten Titans’ influence is growing

Even if you don’t own any of the Ten Titans stocks, their rise may still have ripple effects for your financial portfolio.

The biggest impact would be if you own index funds or exchange-traded funds (ETFs) with exposure to these holdings. Market-cap weighted passive funds that follow a growth theme or the general market will likely have sizable positions in the Ten Titans. And S&P 500 funds that mirror the index, like the Vanguard S&P 500 ETF, SPDR S&P 500 ETF, the iShares Core S&P 500 ETF will all have around 39% of their holdings in the Titans.

The sheer size of the Ten Titans means that the S&P 500 is no longer a balanced index, at least for now. Rather, it’s more of a growth index, similar to how the Nasdaq Composite is typically viewed.

The S&P 500 may contain hundreds of holdings, but its performance is now based on just a couple dozen companies. Investors looking for mid-cap or even large-cap stocks should venture outside the index because the S&P 500 offers little exposure to non-mega-cap names.

Navigating a Ten Titans-dominated market

The rise of the Ten Titans has benefited their shareholders, S&P 500 index fund investors, and folks with exposure to these stocks through ETFs. However, because they are so big, they will likely make the S&P 500 more volatile going forward.

Investors can offset the Ten Titans concentration by investing in value and dividend stocks that no longer make up a large percentage of the S&P 500. On the other hand, if you’re looking for a low-cost and straightforward way to get exposure to top growth stocks, the S&P 500 may be one of the simplest ways to do so.

Shares of Broadcom (AVGO 0.19%) and Oracle (ORCL -5.05%) both ripped higher around earnings, with Oracle’s one-day surge among the biggest in decades. Broadcom, a chip and infrastructure-software company, continues to ride custom artificial intelligence (AI) accelerators and high-end networking. Oracle, the database and cloud provider, stunned investors with a massive jump in contracted work tied to AI demand.

The question for investors is which AI stock looks more attractive after these moves. Looking through the numbers and today’s prices, the edge goes to the company with faster AI growth in hand and a clearer path from bookings to revenue.

Image source: Getty Images.

Broadcom: strong execution, premium price

Broadcom’s most recent quarter underscored how central AI has become to results. In the third quarter of fiscal 2025 (the quarter ended Aug. 3), revenue rose 22% year over year to about $16 billion, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) margin was 67%, and non-GAAP earnings per share was $1.69. Management also guided for fourth-quarter revenue of about $17.4 billion and said AI semiconductor revenue should climb to roughly $6.2 billion in the fourth quarter after growing 63% to $5.2 billion in the third. Free cash flow hit $7.0 billion, or 44% of revenue.

Summing the last four reported quarters puts Broadcom’s trailing-twelve-month non-GAAP earnings per share at about $6.29. At the stock’s price at the time of this writing, near $365, the stock trades around 58 times that trailing-12-months (TTM) figure — rich even after factoring in Broadcom’s breadth across AI accelerators, ethernet switching, and VMware-driven infrastructure software.

One key risk for Broadcom is that a large slice of near-term growth depends on just a handful of hyperscale customers, and cyclical pockets in legacy networking or storage can offset AI strength. Still, Broadcom‘s cash generation, dividend capacity, and guidance argue for durable fundamentals as AI builds out. The question is whether that durability is already priced in.

Oracle: bookings shock — and a new bar to clear

Oracle’s fiscal first quarter of 2026 (the quarter ended Aug. 31) changed the story. Revenue rose 12% to $14.9 billion, non-GAAP EPS increased 6% to $1.47, and — most importantly — remaining performance obligations (RPO) soared 359% to $455 billion on the back of four multi-billion-dollar AI agreements. Yes, you heard that right. Cloud revenue grew 28%, including 55% growth in infrastructure-as-a-service. Investors reacted in dramatic fashion, sending the stock up roughly 36% in a day.

In the company’s earnings release, CEO Safra Catz called it “an astonishing quarter,” adding that demand for Oracle Cloud Infrastructure is building and that more large contracts could follow. Management also previewed a multi-year framework for accelerating Oracle Cloud Infrastructure revenue growth tied to these wins. Momentum in the business is visible in the reported numbers and management’s commentary, but RPO is a commitment that must convert to usage; investors will need to see that flow through revenue and margins over time.

Trading at about $315 as of this writing, Oracle trades roughly 52 times TTM non-GAAP earnings — also expensive, but a discount to Broadcom on this basis. The stock’s violent move higher means execution against that towering backlog is now the key driver of returns from here.

Both companies are clear AI winners. Broadcom has revenue and cash flow already showing up from AI hardware and networking, plus a software portfolio that throws off steady cash. Oracle just unlocked a wave of contracted demand that, if it converts as management expects, could drive years of cloud infrastructure growth.

Choosing between them comes down to what is embedded in the share prices. Broadcom offers observable AI revenue today, but the stock carries a higher non-GAAP TTM price-to-earnings multiple. Oracle’s valuation is lower (though still elevated) and is now backed by a backlog that, if it turns into actual consumption, could reset the company’s growth profile. Given the trade-off — realized AI revenue at a steeper multiple versus massive contracted AI demand at a somewhat lower one — Oracle looks slightly more compelling for investors willing to accept the execution risk of turning record bookings into billable usage at healthy margins. Broadcom remains a high-quality AI play, but its premium leaves less room for error after the recent rally.

The benchmark S&P 500 has recovered dramatically from a tariff-driven shock in April 2025, and is now trading close to record highs. “Magnificent Seven” stocks, in particular, have been the key driver of this mid-year rally. Increasing adoption of artificial intelligence (AI) globally, coupled with strong earnings performance, has been fueling investor confidence for these technology giants.

Semiconductor giant Nvidia continues to be the paragon of this ongoing AI boom. However, another company may soon become a Wall Street darling, as it is helping enable GPUs to work together efficiently in large AI clusters. That company is Arista Networks (ANET -8.77%).

Image source: Getty Images.

While most investors have been focusing on AI chips, networking is also equally important. AI training and inference (real-time deployment) workloads demand enormous clusters of GPUs, which can cost tens of thousands of dollars each. However, without fast, low-latency connections between GPUs, both the training of large AI models and inference at scale suffer from slower performance and higher costs. Arista is well positioned to resolve these challenges.

AI data center catalyst

Arista has established itself as a pure-play Ethernet networking company, delivering hardware and software networking solutions for large-scale AI data centers, as well as for campus and routing networks.

Until recently, Ethernet wasn’t considered strong enough for AI workloads. Instead, Nvidia’s InfiniBand technology was the go-to choice for scale-out back-end AI networks, linking racks of servers and accelerators in massive GPU clusters. Even in scale-up back-end AI networks (within a server rack), Nvidia’s proprietary high-bandwidth interconnect technology NVLink is used to connect GPUs for high-performance and low-latency networking. However, that seems to be changing now.

Ultra Ethernet Consortium (UEC) released its first full specification in June 2025, creating an Ethernet-based system designed for AI and high-performance computing (HPC) at scale. Since then, hyperscalers and enterprises have been migrating away from proprietary InfiniBand to open-source Ethernet. Over time, Arista also expects clients to migrate from NVLink to Ethernet/UALink networking in scale-up back-end networks.

Arista stands to benefit dramatically from this transition, as its Ethernet-based Etherlink portfolio (20-plus products launched since 2024), paired with its Extensible Operating System (EOS) operating system, is being increasingly preferred by data centers for scale-out networking.

The company already accounted for nearly 21.3% of the data center Ethernet switch market at the end of the first quarter 2025. As more AI workloads move to Ethernet, Arista is well-positioned to capture an even bigger share of the global data center AI networking market, estimated to be nearly worth $20 billion in 2025.

Customer base

Management is guiding for AI networking revenue to exceed $1.5 billion in 2025. That includes about $750 million from back-end AI networks alone, a dramatic improvement from absolutely nothing in 2022.

A major chunk of this $750 million revenue target is firmly supported by two hyperscaler clients, Microsoft and Meta Platforms, which have deployed 100,000 GPUs in distributed AI clusters. Each of these clients is expected to account for at least 10% of Arista’s revenues in fiscal 2025. The third hyperscaler client is also close to that scale, while the fourth hyperscaler client is on the way. With its sticky hyperscaler customer base, Arista enjoys significant near-term revenue visibility.

Arista is also expanding its customer base beyond hyperscalers. The company now caters to 25 to 30 enterprises and Neocloud customers (new generation of cloud providers) actively deploying AI clusters. While individually smaller than the big four hyperscaler clients, they are helping offset the slowness in ramp-up of the fourth hyperscaler customer and the loss of the fifth sovereign AI customer. The diversified revenue base has also helped reduce Arista’s overreliance on a smaller client base.

Other markets

Besides AI networking, Arista is also strengthening its position in enterprise campus and wide-area network (WAN) segments. The VeoCloud purchase gives Arista an AI-ready WAN portfolio that helps customers connect branch sites securely, while managing traffic flows more efficiently for AI workloads. Arista now expects its campus switching business to add $750 million to $800 million in revenues in fiscal 2025.

What about the valuation?

Arista shares trade at 47.4 times forward earnings, which is not cheap. Additionally, the company also faces competition from technology giants such as Nvidia and Broadcom, as well as from hyperscalers exploring in-house options in the networking space.

But Arista can still see its share price grow despite the high valuation multiples. The company’s software offerings, comprising EOS operating system and CloudVision network management and automation platform built atop EOS, helps improve networking performance. Since GPUs use high amounts of power, the networking software plays a critical role in reducing the overall GPU usage. Arista’s Ethernet also works across different accelerators, giving customers more flexibility.

The data center industry is gradually moving from a network connection speed of 400 gigabits per second of data to 800 gigabits per second of data. With its Ethernet-based networking products, robust software stack, and long-term customer relations, the company can capitalize on this opportunity. Hence, Arista can emerge as a major winner in the AI networking boom in the coming years.

Earlier this month, Apple CEO Tim Cook joined President Trump and senior Cabinet members in the Oval Office to announce the company’s plan to invest $100 billion into U.S. manufacturing over the next four years. This comes on top of Apple’s previously unveiled $500 billion domestic infrastructure commitment.

Apple’s ramped-up infrastructure efforts have clear implications for Broadcom‘s (AVGO -3.65%) long-term growth trajectory. As Apple expands its U.S. footprint, Broadcom stands to benefit not only from increased demand for chips but also from its emerging role in powering next-generation networking, connectivity, and artificial intelligence (AI) applications.

Let’s break down why Apple’s continued investment in infrastructure strengthens Broadcom’s strategic position, and how it accelerates the company’s ambitions in AI and beyond.

Broadcom has deep inroads with hyperscalers

While Apple may be one of Broadcom’s most visible partners, the company has also been quietly building deep ties with AI hyperscalers — Alphabet being a notable one.

Broadcom’s portfolio spans custom silicon, networking switches, and optical interconnects — the foundational layers that power modern data centers. These may not be headline-grabbing products, but they serve as the invisible scaffolding that enables AI models to train at scale and keeps data workloads flowing smoothly — avoiding costly compute and connectivity bottlenecks.

What makes Apple’s reliance on Broadcom so compelling is how it bridges two high-growth landscapes: consumer electronics (i.e., semiconductor components for the iPhone) and enterprise-grade AI infrastructure. Broadcom’s established relationships with hyperscalers validate its role as a provider of specialized, mission-critical technologies. Meanwhile, Apple’s endorsement amplifies that credibility — signaling to the broader AI ecosystem that Broadcom is a trusted partner.

In essence, Broadcom is solidifying its influence across the entire technology stack — from chips inside of consumer devices to the infrastructure driving next-generation AI applications inside hyperscale data centers.

Image source: Getty Images.

Broadcom is a quiet beneficiary of rising AI infrastructure investment

The explosion of AI workloads has only heightened the need for networking gear and the specialized chips that enable big tech to operate at scale. While Broadcom dominates many of these use cases, it rarely commands the same spotlight as Nvidia, Advanced Micro Devices, and Taiwan Semiconductor Manufacturing.

The reason is straightforward: Broadcom isn’t building GPUs that capture headlines. Rather, the company designs the connective tissue that allows GPUs, CPUs, and memory chips to communicate efficiently. Without Broadcom’s technologies, generative AI advancements would remain throttled by data transfer limits and networking bottlenecks.

Is Broadcom stock a buy right now?

While Broadcom lacks the same levels of excitement that have crowned peers like Nvidia as an “AI darling,” this hasn’t translated into a bargain stock price. On the contrary, Broadcom now trades at a forward price-to-earnings (P/E) multiple of 45 — well above its three-year average and essentially at the highest point of the current AI cycle.

AVGO PE Ratio (Forward) data by YCharts

Broadcom’s premium valuation tells a clear story: The market increasingly views the company as a structural beneficiary of ongoing AI buildouts. Although expectations remain high, Broadcom’s relationships with hyperscalers, as well as its alliance with communications leaders such as Apple help diversify the company’s ecosystem and drive home its broad depth across various applications and use cases.

Unlike Nvidia or AMD, Broadcom does not need to rely on generational product cycles to capture the attention of investors. Instead, the company’s appeal lies in its subtle, less-visible services that keep the digital economy humming along.

This quiet, indispensable nature makes Broadcom less vulnerable to hype-driven volatility while still offering meaningful upside given its exposure to myriad secular trends reshaping the technology landscape.

While the stock isn’t cheap, Broadcom represents a durable infrastructure play as the AI narrative continues to unfold. To me, Broadcom is a compelling opportunity to buy and hold over the long term.