AMD or Broadcom: If I Could Only Own 1 AI Chip Stock Through 2030, Here's My Pick

Advanced Micro Devices (NASDAQ: AMD) and Broadcom (NASDAQ: AVGO) have been among the winners of the ongoing artificial intelligence (AI) boom. Both chipmakers have seen their financial results improve significantly and their shares soar. AMD is up 421% over the past three years, as of writing, while Broadcom has climbed 285%. The good news is that the AI tailwind may persist over the medium term, and both companies are well positioned to capitalize on it. But which one will perform better through 2030? Let's try to figure that out.

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AMD's agentic AI tailwind

AMD is a leader in the CPU (central processing unit) market, and its products have been in greater demand since the start of the AI revolution. However, things might be about to get even better. The next era of AI could focus on autonomous agentic systems that perform tasks for which CPUs are ideally suited. So, we could see even higher demand for AMD's products over the medium term.

We are already seeing signs of that in the company's financial results. During the second quarter, AMD's revenue increased by 50% year over year to $11.5 billion. The company's data center segment posted $6.7 billion in sales, up 107% year over year. AMD credited AI-related demand for the strong revenue growth.

The company also performed well on the bottom line, recording non-GAAP net earnings per share (EPS) of $1.66, up 246% from the year-ago period. AMD has recently gained market share against one of its biggest competitors, Intel (NASDAQ: INTC), and the company still sees significant growth runway ahead.

AMD now expects a $220 billion addressable opportunity in its CPU market by 2030, and a $1.4 trillion opportunity for its AI accelerator products, including its Instinct GPUs (graphics processing units). Importantly, AMD's addressable market estimates have increased over the past year, indicating rising demand for its products.

And considering the company's competitive edge from technological expertise and switching costs, it could capitalize on this growth over the next few years.

Broadcom's custom chips are in high demand

Broadcom designs Application-Specific Integrated Circuit (ASIC) chips, which are custom-made to handle specific AI workloads. These chips are not as versatile as Nvidia's (NASDAQ: NVDA) powerful, multipurpose GPUs. But Broadcom's products can be more cost-effective or energy-efficient than comparable GPUs, and that's why demand for them has exploded. Broadcom is capitalizing on that.

During the third quarter of its fiscal year 2026, which ended on Aug. 2, Broadcom's revenue increased by 86% year over year to $29.6 billion. Broadcom's AI semiconductor revenue soared 221% year over year to $16.7 billion. The company's non-GAAP EPS jumped 96% year over year to $3.32.

Broadcom can continue riding this tailwind over the medium term. The company has signed multi-year agreements with major corporations such as Meta Platforms (NASDAQ: META) and Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL). As a result, it expects to sustain excellent revenue growth, particularly within its AI semiconductor business. The company is projecting $115 billion in revenue for this unit during its fiscal year 2027 -- that's more than the company's current trailing twelve-month revenue.

Broadcom also expects AI revenue to reach $230 billion in fiscal year 2028. Broadcom could deliver solid returns through 2030 if it can maintain that pace through the end of the decade.

The better buy today

Broadcom's gross margins could decline as lower-margin AI semiconductor revenue increases its share of total sales (Broadcom's infrastructure software segment boasts higher margins). That's something to keep in mind. And of course, the AI tailwind may not last as long as some people expect, a potential risk that affects both Broadcom and AMD. That being said, I'd give a slight edge to Broadcom right now because of valuation considerations. Broadcom is trading at 19.4x forward earnings, versus 39.5x for AMD, and a 19.3x average for information technology stocks.

AMD's non-GAAP EPS is growing faster, so perhaps it is worth the premium. Still, Broadcom is the larger of the two, generates higher revenue (which is growing faster than AMD's), and has an AI business that seems even more impressive than its peers'. The possibility that Broadcom will see lower margins and reduced earnings growth in the medium term, even as its AI segment continues to grow, is one reason Broadcom appears only marginally more attractive right now. At any rate, investors can't go wrong with either stock. Both are great picks to capitalize on the AI boom.

Prosper Junior Bakiny has positions in Alphabet, Meta Platforms, and Nvidia. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Broadcom, Intel, Meta Platforms, and Nvidia. The Motley Fool has a disclosure policy.