Broadcom's custom AI chip business grew 221 percent to $16.7 billion in the fiscal quarter ended September 2, yet Nvidia trades at a lower forward earnings multiple despite data center revenue of $89 billion on 117 percent growth. The divergence makes the valuation argument the only one that matters for investors choosing between the two largest AI semiconductor winners.
The ASIC versus GPU split
Broadcom builds application-specific integrated circuits for hyperscalers including Alphabet and Meta Platforms and for frontier labs such as Anthropic and OpenAI. Those chips strip out every transistor not needed for a defined workload, which lowers cost and power per task. Nvidia sells graphics processing units that can run any parallel workload but carry silicon that sits idle when a customer only needs one function. The source argues this makes Nvidia the hunted and Broadcom the hunter in data center share, though no hyperscaler will ever abandon general-purpose GPUs entirely.
The numbers that matter
Broadcom's overall revenue rose 86 percent year over year, lifted by the AI semiconductor segment that now accounts for a material slice of the total. Nvidia's overall revenue climbed 106 percent, with the data center division contributing the vast majority. Neither company breaks out GAAP versus adjusted figures in the disclosure, so the growth rates cited are as reported. The scale difference is stark: Nvidia's AI-exposed revenue base is more than five times larger than Broadcom's dedicated AI chip line.
Guidance and the 2027 bet
Broadcom has long pointed to calendar 2027 as the inflection point when custom chip orders ramp meaningfully. Nvidia recently guided for 70 percent revenue growth in its next fiscal year. Both management teams are asking investors to price the stocks on next year's earnings estimates rather than trailing results, a request that only works if the growth trajectory holds.
What the multiple tells you
On that forward basis Nvidia trades below 20 times earnings while Broadcom sits above that threshold. The source contends both deserve 30 times given the growth rates, which would imply substantial upside for either name. The cheaper multiple on the larger, faster-growing incumbent is the anomaly the market has not yet resolved.