Better Super Semiconductor Stock: Advanced Micro Devices (AMD) or Broadcom?
🧠 The semiconductor industry is central to the AI boom, driving demand for data center chips and networking components from suppliers like AMD and Broadcom.
📈 Since early 2023, Broadcom shares have risen 650% while AMD shares have gained 590% due to the surge in AI demand outpacing supply.
💾 AMD launched its MI300X AI data center GPU in 2023, gaining market share from Nvidia with customers like Oracle and Microsoft.
🚀 AMD is set to ship custom MI450 AI accelerators later this year, configured in Helios racks that offer 36x better performance than previous GPUs.
🤝 Meta and OpenAI signed multiyear deals to deploy 6 gigawatts of computing capacity using AMD's upcoming chips starting later this year.
📊 AMD reported record $5.8 billion data center revenue in Q1 2026, with CEO Lisa Su forecasting over 80% revenue growth for 2027 and beyond.
🔌 Broadcom supplies custom AI accelerators to major clients including Alphabet, Meta, and OpenAI, helping design specialized chips like TPUs.
📈 Broadcom's latest 8i TPU offers up to 80% better performance per dollar, while new Tomahawk 7 Ethernet switches will double data transfer speeds.
💰 Broadcom generated $8.4 billion in AI product revenue in fiscal Q1 2026, a 106% increase, with projected acceleration to 143% in the second quarter.
📉 Valuation differs significantly between the two stocks, with AMD trading at a P/E ratio of 97.5 compared to Broadcom's 56.9.
🪙 Value investors may prefer Broadcom due to its lower P/E, while growth investors might favor AMD's smaller market cap for higher potential upside.
💵 Broadcom currently has a market capitalization over $1.9 trillion, whereas AMD is valued at approximately $720 billion.
🔍 Analysts suggest owning a slice of both companies makes sense given the accelerating revenue growth forecasts for AI-related businesses in both sectors.
⚠️ The Motley Fool's Stock Advisor team recently identified 10 best stocks to buy now but did not include Advanced Micro Devices on that list.
📅 Historical comparisons suggest significant long-term returns are possible, though specific stock performance varies over time like the Netflix example from 2004.
- The semiconductor industry is benefiting from an AI boom where demand is heavily outstripping supply for specialized data center chips and networking components.
- Broadcom shares have exploded higher by 650% since the start of 2023, outpacing AMD's gains in this period.
- AMD has successfully snatched market share from Nvidia with its MI300X GPU, attracting major customers like Oracle and Microsoft.
- AMD's new MI450 series AI accelerators will be configured in Helios racks that perform 36 times better than its previous generation GPUs.
- Meta Platforms and OpenAI signed multiyear deals to deploy 6 gigawatts of computing capacity using AMD's AI chips starting later this year.
- AMD's data center business produced a record $5.8 billion in revenue during the first quarter of 2026, up 57% from the prior period.
- CEO Lisa Su expects the data center segment to generate upward of 80% revenue growth in 2027 and beyond due to high customer demand for MI450 accelerators.
- Broadcom supplies custom AI data center accelerators to at least five major customers including Alphabet, Meta Platforms, and OpenAI.
- Alphabet's new 8t TPU is 3 times more powerful than its previous generation, while the new 8i offers up to 80% better performance per dollar for AI inference.
- Leading AI start-up Anthropic placed $21 billion worth of orders for Alphabet's TPUs delivered through Broadcom in 2026 and 2027.
- Anthropic announced an expansion of its partnership involving significantly more spending on TPUs through at least 2027.
- Broadcom's Tomahawk 6 Ethernet switch offers an industry-leading capacity of 100 terabits per second, with the next-gen Tomahawk 7 expected to deliver double the performance in a year.
- Broadcom's AI products generated $8.4 billion in revenue in fiscal Q1 2026, representing a 106% increase from the previous year.
- Management guidance suggests Broadcom's AI product growth rate accelerated to 143% in the second quarter, to be reported on June 3.
- Broadcom has a much lower P/E ratio of 56.9 compared to AMD's 97.5, making it an attractive value investment.
- AMD has a market capitalization of $720 billion with significantly smaller quarterly data center revenue than Broadcom, potentially offering more room for long-term growth.
- AMD stock is trading at a price-to-earnings (P/E) ratio of 97.5, significantly higher than Broadcom's P/E ratio of 56.9, suggesting the market may be overvaluing AMD relative to its peers.
- Broadcom has already built a massive revenue base in AI with $8.4 billion generated in fiscal 2026 Q1 alone, leaving less room for explosive percentage growth compared to AMD's smaller data center business.
- The Motley Fool Stock Advisor team identified Advanced Micro Devices as not being among their 10 best stocks for investors to buy now, despite the general bullish sentiment on semiconductors.
- AMD's high valuation relies heavily on the success of its upcoming MI450 series and Helios configuration to challenge Nvidia; any failure in gaining market share or meeting performance expectations could lead to a significant stock price correction.
