Artificial Intelligence is a hot theme today. It has electrified markets and led to a massive surge in investments and impressive advancements in the AI space. However, I think the AI industry is still in the growth stage and the transformation is only beginning. Companies are committing billions to AI development in an attempt to make the most of its explosive potential.
Two AI giants- Nvidia (NASDAQ:NVDA) and Broadcom’s (NASDAQ: AVGO) have attracted investor interest and both companies have repotted impressive growth. While no industry is safe from market volatility or challenges, these two companies have compelling strengths. We dive deep into both and choose the better stock for March.
Key points in this article:
- Nvidia and Broadcom are two giant AI players who have established a solid market for themselves.
- Driven by growing investment in the AI industry, these companies are set to have another successful year.
- If you are looking for more AI stocks to add to your portfolio, grab a free copy of our brand-new “The Next NVIDIA” report. It has one stock with 10x upside potential.
Nvidia
One of the biggest tech giants and AI beneficiaries, Nvidia is a long-time favorite of investors. The company reported financial results for the fourth quarter and the revenue came in at $39.3 billion, up 78% year over year while the EPS stood at $0.89. The numbers exceeded expectations but the market was expecting more.
With Nvidia, the market is always looking for more, and considering the rally it has shown, it is natural for investors to expect Nvidia to beat records in each quarter. It enjoys an impressive growth trajectory and has seen massive demand for its GPUs.
As of writing, the stock is exchanging hands for $124 and is up 46% in the year and over 1,500% in the past five years. The stock has seen solid highs and generated unforgettable returns for investors who held the stock over the past five years. Its financials are driven by the data center business which saw a 93% year-over-year revenue jump and generated $35.6 billion in the quarter.
Once known for setting a gold standard for gaming GPUs, Nvidia is investing in research and development of new services for the industry. Nvidia is set to launch the new Ultra GPU architecture later this year. It is a cash flow machine and went through a stock split last year.
The company is highly profitable and has seen a surge in its operating margin. It enjoys the first-mover advantage in the AI industry and has the technical know-how that will allow it to steadily innovate and introduce new products in the market. Despite the competition, no company has been able to achieve the amount of success Nvidia has achieved since 2023. The stock has tripled in value and the company has become a global AI leader.
Wall Street is bullish on the stock and has a strong buy rating.
Broadcom
Broadcom is a manufacturer and supplier of semiconductor and software infrastructure products. It has made significant moves in the AI space and has partnered with some of the top tech companies including Meta Platforms Inc. (NASDAQ: META) and Alphabet Inc. (NASDAQ: GOOGL).
It also reported impressive finances with a revenue of $14.05 billion in the fourth quarter, a 51% year-over-year growth, and a strong gross profit margin of 75%. It also saw a 220% jump in AI sales and the revenue from semiconductors hit a new high of $30.1 billion.
The company generates the majority of its revenue from the custom chip market and it is in a place to make the most of this opportunity. As companies rely less on Nvidia, they will start looking elsewhere and Broadcom has already established itself as a strong industry player.
The stock is exchanging hands for $199 and is up 42% in the year. It has soared over 600% in the past five years but is trading lower than the 52-week high of $251. AVGO stock was impacted after DeepSeek claimed that it developed an AI model at a low cost. However, I believe the dip is temporary and Broadcom will be able to bounce back and continue to remain an AI beneficiary.
Broadcom is set to report results on March 6, which will provide better insights into the financials. It has guided for $14.6 billion in revenue and an EPS of $1.51. If it manages to beat expectations, we could see the stock moving higher. I think the company is heavily dependent on its partnerships with the tech giants and since these companies are planning to increase their AI expenditure, Broadcom will see revenue growth in 2025.
The verdict
Between Nvidia and Broadcom, I’d choose Nvidia as a better AI pick. The company has already established itself as an industry leader, and it has the potential for a higher upside as compared to Broadcom. While both have found success amidst the competitive AI industry, Nvidia has a track record of beating expectations and dominating the market. If you are bullish on AI, Nvidia could be the best choice.
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