Unless you’ve been living under a rock, you’d be aware of the growing dominance of artificial intelligence. AI is everywhere, and it is transforming the way we live. It is expected that the AI industry is going to see rapid growth in the coming years. This will increase AI infrastructure spending as companies pour billions into the industry to remain at the top.
With several tech giants in the industry, it can become overwhelming to pick a winner. Not every company can be an Nvidia Corp. (NASDAQ: NVDA | NVDA Price Prediction) or Palantir Technologies (NASDAQ:PLTR) that made investors rich. However, you’re still not too late to the AI party. If you’re willing to bet on AI stocks and confused between Broadcom (NASDAQ: AVGO) and Meta Platforms (NASDAQ: META), I’ll help you pick one.
Broadcom
An unstoppable stock, Broadcom is rising as the biggest trend in the market. In no time, the company has become one of the best AI players in the industry. A leader in Ethernet and networking components, Broadcom handles data for companies and distributes AI workloads across servers.
The company doesn’t design chips like other AI players. Instead, it offers customized solutions to users and develops application-specific integrated circuits. Broadcom works with hyperscalers who are developing their own custom AI application-specific integrated circuits that reduce costs and enhance performance. These hardwired chips can handle specific tasks and perform efficiently.
It has already reached the market cap of $1 trillion and could join the Magnificent Seven very soon. Broadcom helped Alphabet (NASDAQ:GOOG)(NASDAQ:GOOGL) create the Tensor Processing Units, and Meta Platforms and OpenAI are working with it to design their custom AI chips.
The stock gained 46.33% in the past year and is exchanging hands for $343.94. While the stock has dropped in value since the start of the year, it has massive growth potential. It is the largest chip partner for Alphabet, and its revenue growth is significantly attached to Alphabet.
The company’s fundamentals are equally impressive. It ended Q4 with a revenue of $18 billion, up 28% year over year, and a backlog of $73 billion. The management expects to double the AI chip revenue this quarter.
Broadcom is more than just AI and isn’t dependent on chips. It has a wide range of products and services that cater to multiple clients in the industry. The data center boom is ongoing, and Broadcom is well-positioned to benefit from the rising capital expenditures.
Meta Platforms
One of the Magnificent Seven, Meta Platforms has become a household name today. The company is pouring millions into AI and its Reality Labs metaverse business. While there is growing scrutiny on whether companies can generate profit from the hundreds of billions poured into AI, I feel Meta has cracked the code.
Meta has moved to generative AI, which has transformed the business and helped earnings growth. This justifies the continued spending. With the higher spending, Meta has seen higher AI use and growing future potential.
Its numbers have impressed the market, beating expectations. The company ended the fourth quarter with a revenue of $59.89 billion, a 24% year-over-year jump. Its EPS stood at $8.88. Meta generated $58.1 from the advertising business revenue, which made up 97% of the total revenue for the quarter.
The company’s capital expenditure related to AI is expected to be in the range of $115 billion to $135 billion for 2026, almost double the amount it spent in 2025.
The strong quarterly numbers highlight that it is doing everything right with AI and could outshine its competitors in the long term. Its basket of social media apps will continue to generate revenue for the company.
WhatsApp has seen massive growth and has more than 3 billion monthly users right now. Meta Platforms’ Reality Labs generated $955 million in revenue and saw a 12% year-over-year drop. It also recorded a loss from operations. However, the other business segments more than made up for this loss.
Meta stock has lost 5.5% over the past year and is exchanging hands for $677.37. The company is spending billions on AI, and Wall Street is bullish on the stock.
The Verdict
While Broadcom and Meta Platforms are both excellent businesses to own, I’d pick Broadcom over Meta. The company has high margin, recurring revenue, and massive expansion potential. It can enjoy juicy margins and a predictable cash flow.
Jefferies has a buy rating with a price target of $500, while Wells Fargo has a buy rating with a price target of $430. Wolfe Research also has an Outperform rating with a price target of $400. There’s the potential of a significant upside in the stock, and AVGO could emerge as one of the best AI stocks in 2026.
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