This Tech Sector Stock Is Way Cheaper Than Broadcom

Despite Broadcom's 132% rally over the past year driven by AI networking demand and the VMware acquisition, its shares trade at roughly 41x forward earnings, leaving limited margin for error; by contrast Nvidia trades at about 24.3x forward earnings and the company is backing that valuation with strong execution — Q3 FY2026 revenue rose 62% year-over-year to $57 billion (data center revenue up 66% to $51.2 billion), management cites roughly $500 billion of revenue visibility from Blackwell and Rubin shipments through 2025–26 (about $150 billion already shipped), and it plans to deploy 5 million GPUs — positioning Nvidia to capture a meaningful share of a $3–4 trillion AI infrastructure buildout by 2030, which the article argues makes Nvidia the more attractive buy today.

Analysis

The article contrasts Broadcom's steep share-price appreciation (up ~132% over the past year) and 41x forward earnings multiple with Nvidia's lower 24.3x forward multiple, noting Broadcom's VMware deal is shifting its mix toward higher-margin software but leaves little room for execution misses. Nvidia reported Q3 FY2026 revenue of $57.0 billion, up 62% year-over-year, with data-center revenue of $51.2 billion (up 66% YoY); management provided stronger Q4 guidance (roughly 14% sequential revenue growth at the midpoint) and expects gross margins in the mid-70s. Management cites cumulative revenue visibility near $500 billion from Blackwell and Rubin shipments through 2025–26 with about $150 billion already shipped, and plans to deploy 5 million GPUs across AI factories and infrastructure, positioning Nvidia to capture part of a $3–4 trillion AI-infrastructure opportunity by 2030. The takeaway for investors is valuation-supported upside for Nvidia if execution and backlog conversion continue, while Broadcom’s premium multiple increases sensitivity to any slowdown in AI-chip or networking demand.

Key Decisions for Investors

• Consider a selective overweight in NVDA versus AVGO given NVDA's 24.3x forward multiple paired with $500 billion revenue visibility, but size positions to limit concentration risk
• Monitor near-term execution metrics—Q4 revenue versus the ~14% sequential midpoint, data-center revenue trends, and gross margins in the mid-70s—as primary catalysts for adding to NVDA
• Trim exposure or hedge Broadcom positions given a ~41x forward multiple that leaves limited room for error around AI-chip/networking demand or VMware integration outcomes
• Use conversion indicators (shipments realized from the $500B Blackwell/Rubin backlog and progress toward the 5 million GPU deployment target) to reweight exposure across the thesis