Why Broadcom Stock Is a Better Long-Term AI Stock to Buy Than Nvidia | The Motley Fool

When investors think about the artificial intelligence (AI) infrastructure build-out, Nvidia (NVDA +2.59%) is usually the first name that comes to mind. The tech company’s graphics processing units (GPUs) have powered the initial wave of the generative AI boom, rewarding shareholders handsomely along the way.

But as the market matures, a new dynamic is taking shape.

Hyperscalers and tech giants are scrutinizing the massive costs of building data centers and actively seeking ways to reduce their reliance on pricey, power-hungry GPUs.

This shift plays perfectly into Broadcom‘s (AVGO +4.69%) hands. As the go-to partner for custom AI chips, Broadcom is offering hyperscalers a cheaper, more energy-efficient alternative.

The double-edged sword of Nvidia’s margins

To understand the risk hovering over Nvidia, you have to look at its profitability. Nvidia’s margins have done incredibly well recently, serving as the ultimate proof of its economic moat.

In its…