Since the start of the artificial intelligence (AI) infrastructure boom, the market has been dominated by Nvidia (NASDAQ: NVDA). However, as the landscape shifts from training foundational large language models (LLMs) to inference and agentic AI, Advanced Micro Devices (NASDAQ: AMD) and Broadcom (NASDAQ: AVGO) are emerging as strong players. Let’s look at what each…
Since the start of the artificial intelligence (AI) infrastructure boom, the market has been dominated by Nvidia(NASDAQ: NVDA). However, as the landscape shifts from training foundational large language models (LLMs) to inference and agentic AI, Advanced Micro Devices(NASDAQ: AMD) and Broadcom(NASDAQ: AVGO) are emerging as strong players.
Let’s look at what each brings to the table and which is the best stock to buy right now.
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Nvidia
Nvidia remains the leader in LLM training, and that is unlikely to change. The company created a wide moat in this area with its CUDA software platform, which it planted in early AI research centers, essentially leading most foundational AI code to be written on its software and optimized for its graphics processing units (GPUs).
However, the company isn’t sitting still when it comes to inference and agentic AI. Its “acquisition” of Groq brought with it language processing units (LPUs) designed specifically for inference, which it has since incorporated into its CUDA ecosystem. Meanwhile, the company is positioning itself as a leader in agentic AI with the introduction of its Vera Rubin central processing units (CPUs). It sees this as a new $200 billion market opportunity, and thinks it can hit $20 billion in CPU revenue this year.
Nvidia today is much more than GPUs, it’s a complete AI infrastructure solution company. In fact, its fastest-growing business has been its networking portfolio, as it delivers complete AI rack solutions.
AMD
Long an afterthought in the GPU space, AMD is positioning itself to be a strong alternative to Nvidia in the inference market. The inference market is generally more constrained by memory than compute power, and the company’s chiplet design allows it to be packaged with more memory. Along with improvements in its ROCm software, the company is much better positioned today than in the past, and it has two large GPU partnerships in place that should help drive growth in the coming years. It’s also rumored that Anthropic will begin using AMD’s newest GPUs for inference.
Meanwhile, the company is also well positioned for agentic AI as one of the leaders in the data center CPU space. This market is starting to boom, as the ratio of GPUs to CPUs in the data center begins to shrink. With training, the ratio has been 8:1, but it moves to 4:1 with inference and down to 1:1 for agentic AI. With agentic AI needing more cores, which act as individual workstations, high-performance CPU prices should also be on the rise. While a CPU typically costs less than 10 times that of a GPU, this is still a huge market opportunity for a company with a much smaller revenue base than Nvidia.
Broadcom
With Nvidia’s newest Rubin GPU expected to cost $55,000 per unit, it’s perhaps no surprise that hyperscalers (owners of large data centers) have been looking to design their own custom chips to try to save costs. They’ve seen the advantage Alphabet has gained with its tensor processing units (TPUs) and are now trying to replicate the company’s success.
As such, more and more hyperscalers have been turning to Broadcom for help. The company is a leader in application specific integrated circuit (ASIC) technology and helped Alphabet develop its TPUs. In addition to an increasing list of custom chip customers, Broadcom is also benefiting from the surge in TPU deployment, including Alphabet starting to let some select customers order TPUs directly from Broadcom. The company sees a clear line of sight to more than $100 billion in ASIC revenue in its fiscal 2027 alone.
Its custom chip business also feeds into its data center networking business, where it is a leader in the space. Between these two markets, the company is set to see huge growth in the coming years.
Image source: Getty Images.
The verdict
At this point, I don’t think you can go wrong with owning any of these three AI stocks and would consider all three as buys. Nvidia is the cheapest of the group and the fastest growing currently, although it’s become a massive company. Meanwhile, AMD and Broadcom have huge growth drivers on the horizon.
If I could only pick just one of these three stocks, it would be AMD, as it has two really enormous market opportunities in front of it that are just in the very early innings. In a market that loves growth, it’s the stock to buy.
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Geoffrey Seiler has positions in Advanced Micro Devices, Alphabet, and Broadcom. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Broadcom, and Nvidia. The Motley Fool has a disclosure policy.
The Best Stocks to Buy Right Now: Nvidia vs. AMD vs. Broadcom was originally published by The Motley Fool
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