And Stock Nvidia (Nasdaq: NVDA) has been an amazing contractor in recent years. Thanks to the sky of demand for its high -power chips (GPU), the company has become the largest business in the world with market capital over 4 -TRNs.

Recently, investors focus on the next supply of AI systems and it is Broadcom (NASDAQ: AVGO). Could this be the next Nvidia?

Amazing AI growth

The latest news from Broadcom – which produce non -standard AI systems (calls these “XPU”) for gigantic technology companies – they were certainly exhilarating.

At the beginning of this month, the company told investors that it had just signed the fourth customer in terms of non -standard arrangements. It is believed that it is the owner of Chatgpt Openai (the other three are considered Google, Bytedance and Meta platforms).

This fresh customer has recently put orders on AI worth USD 10 billion. As a result, Broadcom expects a huge enhance in revenues in the near future.

In this quarter, he expects AI Chip revenues to be USD 6.2 billion, 19% higher than in the last quarter. In the following financial year (from November) he expects that AI Chip revenues will enhance by over 60%.

These are amazing numbers. And this is a bit like Nvidia a few years ago.

Has the horse already screwed up?

However, looking at the configuration, I do not expect, however, that Broadcom shares will be the same in the same way as in recent years Nvidia. There are three reasons.

The first is that the supply has already shot spectacularly. Over the past three years, it has increased from around 50 to 360 USD – a profit of around 620%.

Secondly, Broadcom is now a gigantic company. Today it has capitalization S&P 500 index.

Note that when Nvidia really began to struggle at the beginning of 2023, it was a much smaller company. At that time, he had a market capitalization less than USD 400 billion.

Third, the valuation of the company now looks quite high. Since Wall Street analysts expect a profit for a share of USD 9.06 next budget, the price rate for profit (P/E) is around 40.

This is not huge multiple earnings. But I don’t think it leaves a lot of space for a significant re -evaluation.

Connect it all and I don’t think that Broadcom is probably double or triple in the near future.

Of course, it can still work well. If expenses from existing XPU clients enhance and/or the company manages to get more customers for non -standard AI systems, we could enhance revenues and earnings.

It is worth noting that during the last conversation of Hock Tan profits said that in the future XPU participation in its main clients may be greater than GPU participation. In other words, the demand for non -standard AI systems can outweigh the demand for general systems designed by NVIDIA.

In my opinion, however, Nvidia is actually a better reserve to consider the purchase. It trades at a lower valuation (its ratio is only 28) and has a lower risk of concentration of customers than Broadcom.