By Danny Vena, CPA
Publication Date: 2026-01-25 08:02:00
This semiconductor and networking specialist is increasingly the chip of choice for artificial intelligence (AI) processing in the data center space.
The dawn of artificial intelligence (AI) saw Nvidia (NVDA +1.60%) take the pole position, as its graphics processing units (GPUs) provided the computational horsepower necessary to handle the rigors of AI. The stock has risen 1,160% since early 2023, fueled by unprecedented demand for its AI-centric chips.
However, 2025 saw a changing of the guard. Broadcom (AVGO 1.61%) stock outpaced Nvidia, rising 49% compared to 39% gains for Nvidia. Let’s take a look at what’s driving Broadcom higher and why I predict we could see a repeat performance in 2026.
Image source: Getty Images.
The next big winner
The speed and flexibility offered by GPUs made them the go-to for AI training and inference in the early days of the AI boom, but priorities have begun to shift. While Nvidia’s chips are still best in class and demand remains high, the sheer magnitude of energy consumption has become a consideration.
That’s where Broadcom’s application-specific integrated circuits (ASICs) come in. These specialized AI chips can be customized, making them more energy-efficient for specific, repetitive tasks. As a result, data center and cloud operators are shifting the mix of their AI-capable chips, substituting Broadcom’s ASICs for a portion of their GPUs to save energy and, ultimately, money. The trade-off is that these ASICs don’t offer the same…
