For Broadcom, the opportunity lies in its expanding role in developing custom AI chips for hyperscalers. Jay Goldberg, a partner at Seaport Research, described Broadcom as “very, very capable” in this domain, noting that the company had already begun gaining market share prior to NVIDIA’s leadership challenges. Goldberg stated that Broadcom has effectively “cracked it open” in the custom silicon market, a move that places additional pressure on NVIDIA. Will McGough, Chief Investment Officer at Prime Capital Financial, concurred, suggesting that Broadcom is well-positioned to “step in and fill some of the gap” during the transition period. Both analysts emphasize that this shift is not solely driven by NVIDIA’s internal issues but is part of a broader trend where tech giants seek to reduce reliance on a single supplier.
AMD, meanwhile, is being viewed as a more formidable rival in the data-center space. Goldberg noted that AMD has moved beyond merely gaining a foothold and now offers “formidable products” that compete effectively with NVIDIA’s offerings. This assessment is supported by recent financial data from Counterpoint Research, which reported that AMD’s third-quarter revenue rose 45% year over year to $13.4 billion. Within that total, data-center revenue climbed 97% to $8.5 billion, representing 64% of the company’s overall revenue. Counterpoint forecasts that data-center revenue could exceed 80% of AMD’s total by 2027, with estimates reaching approximately $77 billion. The firm also highlighted that AMD’s fourth-quarter revenue guidance of about $17 billion stands roughly $800 million above consensus expectations, driven by a projected 50% sequential growth in data-center revenue.
Market reactions to these developments have been mixed but notable. While AMD shares gained over 30% in the five days leading up to Friday, reflecting bullish sentiment on its competitive trajectory, the stock was down 2.36% at $571.47 in premarket trading on Friday. Conversely, NVIDIA shares lost 11% over the same period as investors grappled with the implications of Huang’s departure. McGough pointed to specific examples of this diversification, citing Anthropic’s use of AMD chips and the ongoing development of custom silicon by Alphabet Inc. (NASDAQ:GOOG), Amazon.com Inc. (NASDAQ:AMZN), and Chinese chipmakers. He argued that advances in AI models could weaken NVIDIA’s software advantage, making alternative hardware more attractive to enterprise customers.
Despite the competitive pressure, analysts stopped short of declaring NVIDIA’s dominance broken. Goldberg acknowledged that while the uncertainty may push customers to diversify faster, NVIDIA has not lost its dominant position. The core issue is no longer just demand, which remains robust across the sector, but rather the dynamics of supply and supplier risk. Counterpoint Research noted that AMD has secured supply agreements with Taiwan Semiconductor Manufacturing Company Ltd. (NYSE:TSM) to support its projected growth, making execution and the ability to ship chips the central questions for the company in 2027. The firm expects AMD’s server business to roughly double in 2027, with data-center AI revenue more than doubling.
Investors are currently reassessing the competitive moat of NVIDIA as alternative suppliers become more capable. For Broadcom, which is scheduled to report earnings on Dec. 9, analysts expect strong performance, with earnings forecast at $3.81 per share, up from $1.95 a year earlier, and revenue reaching $34.89 billion, compared with $18.02 billion in the same period last year. The stock currently trades at a price-to-earnings ratio of 46.5, with a consensus Buy rating and an average price forecast of $522.92. Recent analyst actions include Rosenblatt maintaining a Buy rating with a $600 price target and DA Davidson upgrading Broadcom to Buy with a $400 target. This sentiment aligns with the broader view that while NVIDIA remains the leader, the era of uncontested dominance may be giving way to a more competitive and diversified AI chip market.
The implications extend beyond individual stock prices to the structural health of the AI supply chain. As hyperscalers invest in custom processors to optimize costs and performance, they are reducing their exposure to single-vendor risk. For AMD and Broadcom, this represents a significant opportunity to capture market share in a high-growth sector. However, the success of this strategy hinges on their ability to maintain supply chain integrity and continue product innovation. As the industry watches NVIDIA’s leadership transition, the focus for competitors remains on executing their own roadmaps and solidifying their positions with key customers. The next critical data point will be Broadcom’s upcoming earnings report, which will provide further insight into the pace of its growth in the custom AI chip segment.
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