This AI Company Could Disrupt Nvidia and Its Stock Is a Screaming Buy

There's not a lot of debate that Nvidia (NASDAQ: NVDA) has been the best way to invest in the AI buildout since it kicked off in 2023. Its stock has soared over 1,100% since then, but it has delivered relatively lackluster returns since about August of last year.

There's a general sentiment in the market that Nvidia can't keep this up and is primed to be disrupted. I don't necessarily agree with that and still think Nvidia is a worthy investment pick -- but so is this company that's trying to disrupt Nvidia's business.

The biggest competitor to Nvidia right now is Broadcom (NASDAQ: AVGO). Broadcom is taking a different approach to AI computing, and it's unique enough that it can carve out its own niche that allows Nvidia to make a ton of money still, but also deliver monster growth for Broadcom investors.

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Broadcom's computing units are specific to their workload

Nvidia makes graphics processing units (GPUs), which are fantastic for handling multiple types of workloads. This makes Nvidia's computing hardware the go-to option for many clients, as they can do nearly anything they want on these units. However, GPUs aren't always the most efficient choice. If a GPU is only going to see one type of workload throughout its service life, then these extra capabilities are wasted.

That's where a custom AI chip from Broadcom comes in. It's partnering directly with AI hyperscalers to design custom chips that are suited to their specifications. While these don't have the flexibility that a GPU does, they can deliver similar to better performance in some applications at a cheaper price point. The most well-known example of a custom AI chip is Google's Tensor Processing Unit (TPU). The TPU has allowed Google to surge back into the top positions of the generative AI buildout, and is a popular computing option to rent out from its cloud computing platform.

Broadcom expects monster growth from its AI semiconductor division over the next few years. During Q1 of fiscal year 2026 (ending Feb. 1), Broadcom generated $8.4 billion in AI semiconductor revenue, up 106% year over year. Next quarter, it expects this figure to rise 76% year over year to $14.8 billion. By the end of 2027, this business unit expects to generate over $100 million in revenue.

That's monster growth, and will lead to an incredibly successful stock if Broadcom can deliver on those promises. Some of those sales will come at the expense of Nvidia losing out on them, but there is still plenty of room for both companies to thrive due to the massive demand for AI hardware. I think each of these stocks makes perfect sense to invest in right now, although Broadcom could outperform Nvidia if its projections pan out.

Keithen Drury has positions in Broadcom and Nvidia. The Motley Fool has positions in and recommends Nvidia. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.