Nvidia vs. Broadcom: Which Trillion-Dollar AI Chip Stock Has More Upside After Their Latest Earnings?

The artificial intelligence (AI) hardware race used to look like a two-lane highway: Nvidia (NASDAQ: NVDA) sold general-purpose graphics processing units ( GPU s), while Broadcom (NASDAQ: AVGO) sold custom silicon, known as XPUs.

That story is becoming stale. After Nvidia and Broadcom each reported earnings, it's becoming increasingly clear that both companies look less like chip specialists and more like competing architects for the entire data center.

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The question is no longer which company makes the better accelerator. Rather, investors should assess who is positioned to capture more of the AI infrastructure stack as hyperscalers continue to spend record sums on both custom ASICs and general-purpose chips.

AI infrastructure is no longer a story of GPUs vs. XPUs

Nvidia is no longer just a pure-play GPU designer. During the second quarter, the company's data center segment generated $89 billion in revenue, up 117% from a year earlier. The interesting part is what sat alongside the GPU sales.

Grace CPUs, launched in 2021, have generated more than $5 billion in sales over the last year. Moreover, the new Vera Rubin CPUs are expected to generate roughly $20 billion in sales by next quarter, with management forecasting revenue to more than double in fiscal 2028 as the platform ramps.

Meanwhile, Nvidia's software layer continues to expand through CUDA, Nemotron, Cosmos, and Isaac. The company's recent acquisition of Hugging Face for $12.9 billion is the clearest manifestation of this software shift, underscoring how Nvidia is becoming the place where generative models are shared, not just the silicon they run on.

Broadcom sits on the other side of the chip equation. Custom accelerators are the primary growth engine, with XPUs shipments comprising 73% of the company's $16.7 billion in AI semiconductor sales last quarter.

However, networking solutions are supposed to grow just as fast in the upcoming quarter. Meanwhile, infrastructure software generated $8.8 billion in revenue -- up 29% year over year. This growth is respectable and shows that the VMware acquisition is proving a transformative complement to Broadcom's semiconductor business.

Custom chips for Alphabet 's Google Cloud, OpenAI, Meta Platforms , and Anthropic sit on top of Ethernet switches, optics, and software that Broadcom provides. CEO Hock Tan gives a straightforward pitch: If you design chips around one customer's model requirements, you can make it cheaper and more power-efficient than a one-size-fits-all GPU.