2 AI Chip Stocks I'd Buy Before Their Next Earnings Reports
Key Points
AMD has a big opportunity with data center CPUs as agentic AI increases demand.
Broadcom is set to see strong revenue growth, but proving it can maintain a strong gross margin could be a big catalyst for the stock.
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If you've got $5,000 available to split between two chip stocks ahead of their next earnings reports, I'd be using those funds to invest in Advanced Micro Devices (NASDAQ: AMD) and Broadcom (NASDAQ: AVGO). Both companies are seeing strong growth that should continue this current quarter and beyond.
AMD typically reports its fiscal first-quarter results in early May, while Broadcom won't report its next results until early June. Investing $2,500 in each stock is a good starting point, and it gives investors plenty of time to build positions in these two semiconductor stocks.
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Why invest in AMD ahead of its next earnings
One of the reasons why AMD is a solid stock to own before its next earnings report is that the company is really going to start to hype its data center opportunity with central processing units (CPUs). The age of agentic AI is just starting to ramp up, and with it will come the need for a lot more CPUs to add sequential logic and workflow management capabilities to data centers. CPUs are also reportedly supply-constrained given the strong increasing demand, which is leading to higher prices.
At the same time, AMD already has two large graphics processing unit (GPU) partnerships in place. The first deployments are expected to begin in the second half of 2026. Between its data center CPU opportunity and these GPU deals set to ramp up, I'd expect AMD to issue strong guidance when it next reports earnings, which is often a catalyst for stocks.
Why invest in Broadcom ahead of its next earnings
Broadcom has one of the biggest growth opportunities in AI infrastructure in front of it, as customers begin to ramp up their custom AI chip production. This is an enormous opportunity, with the company projecting $100 billion in sales just from custom AI chips in its fiscal 2027. Meanwhile, Anthropic already has a $21 billion order for Alphabet's Tensor Processing Units (TPUs) that Broadcom will deliver later this year.
However, this is just one half of the AI pie, and with those AI chip sales will come the need for more networking components, like Ethernet switches, to connect them. Broadcom offers end-to-end connectivity, and its networking business is also set to surge as AI chip clusters grow in size. While investors are pretty in tune with Broadcom's custom AI chip opportunity, I think its networking portfolio will really shine this upcoming quarter.
Meanwhile, perhaps the biggest catalyst for the stock will be gross margin. The company has already indicated that its AI ASIC (application-specific integrated circuits) business will not be a drag on its semiconductor margins, but if it can show this is the case, I think the stock can stage a nice rally from here.
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Geoffrey Seiler has positions in Advanced Micro Devices, Alphabet, and Broadcom. The Motley Fool has positions in and recommends Advanced Micro Devices and Alphabet. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.
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