In recent years, Nvidia (NVDA 1.41%) has demonstrated its ability to deliver explosive growth in both earnings and stock performance. The company is the leading maker of something that’s been in extremely high demand: the artificial intelligence (AI) chip. Nvidia’s graphics processing units (GPUs) are the compute powering the most critical of AI tasks, such as the training and inference of models.
Though others sell AI chips, customers have flocked to Nvidia in particular due to the speed and efficiency of its GPUs, helping earnings to soar in the double and triple digits to record levels. And in response to that great performance, the stock price has soared more than 1,000% over the past five years.
Demand for Nvidia’s products continues to roar higher, so we may expect the stock to deliver a fantastic performance this year — and I think that’s likely to happen. Still, my prediction is the best-performing AI stock on the Nasdaq by year-end won’t be Nvidia. Let’s consider this player that might outperform the AI giant.
Image source: Getty Images.
A player in the AI chip market
The company that I’m thinking of operates in the AI chip market, but I don’t consider it a direct rival of Nvidia. And this is a key benefit for this company, as it’s carving out its own share of the market — without the tough task of trying to beat the AI chip leader. The player I’m talking about is Broadcom (AVGO 0.65%).
You might know Broadcom best for networking, as it provides connectivity for products across homes, businesses, and data centers. In fact, about 99% of internet traffic touches at least one Broadcom product.
Today’s Change
(-0.65%) $-2.74
Current Price
$419.91
Key Data Points
Market Cap
$2.0T
Day’s Range
$417.82 – $429.31
52wk Range
$184.02 – $429.31
Volume
603K
Avg Vol
26M
Gross Margin
64.96%
Dividend Yield
0.59%
In recent times, though, one particular business has been driving growth, and that’s AI. Broadcom makes chips — and the networking equipment, like routers and switches, that allow for communications between these powerful platforms. Now, when I say “chips,” you might start thinking about competition with Nvidia, but as I mentioned, these two players have taken different approaches.
Nvidia’s GPUs are general-purpose, ready to take on any AI task at the highest speed available. Broadcom’s chips, called XPUs, are custom-designed to suit a specific purpose. So while a customer may turn to Nvidia for a GPU that handles a wide variety of tasks, that customer may go to Broadcom for XPUs that can manage a particular task and are specifically designed for that customer’s AI stack.
A $100 billion forecast
This is great because it doesn’t put Broadcom in the position of trying to rival Nvidia. And the strategy is working. In recent quarters, demand and revenue have climbed — and the company recently said that it’s on track to generate revenue from AI chips alone of more than $100 billion in 2027. Importantly, Broadcom also says that it has verified that its supply chain is ready to support such volume.
Major data center customers — such as Meta Platforms and Alphabet — have been rushing to Broadcom for XPUs, and the company said its relationship with customers is “is deep, strategic, and multiyear.”
Now, let’s consider my prediction. Though Broadcom stock has climbed over five years, it hasn’t advanced as much as Nvidia.
Nvidia is less expensive than Broadcom right now — but both stocks have greatly declined in valuation and trade at reasonable levels today, making them interesting buys.
AVGO PE Ratio (Forward) data by YCharts
Meanwhile, Broadcom has outperformed Nvidia so far this year — it’s gained about 16% compared to a 7% increase for Nvidia. In recent months, investors have rotated out of some of the biggest AI winners into AI stocks that might offer a new burst of growth ahead. Here, it’s important to keep in mind Broadcom’s forecast for explosive AI chip growth in the coming year. Investors, optimistic about this, may continue to pile into this stock — a player that already has strong momentum.
That’s why my prediction is the best-performing stock in the Nasdaq in 2026 might not be Nvidia — and instead, it could be Broadcom.