Key Takeaways:
Broadcom and AMD closed earnings season with data center results that reframe who actually threatens Nvidia's dominance in AI compute.
Broadcom's AI semiconductor revenue jumped 143 percent to $10.8 billion in fiscal Q2, while AMD's data center revenue more than doubled to $6.72 billion — two divergent paths to challenging Nvidia's grip on AI silicon.
"AI XPU and networking demand is simply insatiable," Hock Tan, Broadcom's chief executive, said, guiding full-year AI semiconductor revenue to $56 billion with visibility extending into 2028.
Broadcom posted revenue of $22.19 billion, up 47.9 percent year over year, with non-GAAP EPS of $2.44, an eighth straight beat. AMD reported $11.54 billion in revenue, up 50.11 percent, with data center segment operating income swinging from a $155 million loss to $2.10 billion. Gaming fell 31 percent, a reminder the console cycle still bites.
The divergence matters because Broadcom collects a toll on every hyperscaler cluster regardless of whose chips win, while AMD still fights for design slots Nvidia usually locks up.
Broadcom's AI franchise sidesteps merchant GPUs entirely. It designs custom XPUs for Google, Meta, OpenAI, and Anthropic, and sells the Ethernet fabric — Tomahawk 6 and Jericho 4 switches — that stitches 100,000-GPU clusters together. Networking alone was almost 40 percent of Q2 AI revenue. Every hyperscaler build pays a Broadcom toll whether the compute is Nvidia, AMD, or in-house silicon.
Backlog tells the story: AI bookings sit above $30 billion against $10.8 billion already shipped. Tan told investors 2027 AI revenue will "very easily" exceed $100 billion, underpinned by confirmed gigawatt commitments from OpenAI, Anthropic, Meta, and Google. A renewed chip supply agreement with Apple through 2031, exceeding $30 billion, adds long-term visibility outside the hyperscaler AI market.
AMD is doing the harder thing: challenging Nvidia head-on with merchant Instinct GPUs. The Anthropic collaboration covers up to 2 gigawatts of MI450 in Helios racks, and Microsoft is scaling Helios on Azure. AMD has disclosed 14 gigawatts of capacity commitments across OpenAI (6 gigawatts), Meta (6 gigawatts), and Anthropic (2 gigawatts), with Helios rack pricing confirmed at $5 million to $5.5 million per rack.
The shift from selling accelerators to selling racks changes AMD's margin structure, bundling Instinct MI400-series GPUs, sixth-generation EPYC Venice CPUs built on TSMC's 2-nanometer node, Pensando networking, and ROCm software into one integrated platform. AMD started sampling MI450 GPUs with lead customers in May and says Helios production shipments remain on track for the second half of 2026.
The quieter driver behind AMD's 193 percent twelve-month run is that agentic AI turned out to be CPU-intensive. UBS estimates the server CPU total addressable market could expand from roughly $30 billion in 2025 to $170 billion by 2030, with AMD positioned as a primary beneficiary after six straight years of taking share from Intel.
Broadcom trades at roughly 32 times this year's expected earnings, about half of AMD's forward multiple, while generating free cash flow of $10.3 billion — 46 percent of revenue — and paying a dividend yielding about 0.68 percent. AMD, up 193 percent over the past year, offers higher beta but leaves little margin for execution error; its 14-gigawatt pipeline is disclosed capacity, not contracted revenue, and both OpenAI and Meta deals carry warrants that could dilute up to 320 million shares.
Morgan Stanley reaffirmed its Buy on Broadcom, calling it a "core AI winner," with an average analyst price target of $501.58 across 26 analysts. AMD's consensus target sits at $576.55. If you want defensive AI exposure with a dividend and 15 straight annual raises, Broadcom fits the profile; if you want higher-beta upside and can stomach a rich multiple, AMD offers the sharper shot — though after a 193 percent run, the next earnings report will test whether the market has already priced in the win.
This article is for informational purposes only and does not constitute investment advice.
