Broadcom Outpaces Nvidia In AI Chip Stock Valuation Race: Is Investor Sentiment Shifting?

Broadcom Inc AVGO has quietly overtaken Nvidia Corp NVDA in valuation metrics, signaling a shift in investor sentiment within the AI chip industry.

Chart created using Benzinga Pro

While Nvidia remains a powerhouse, recent market action tells a different story.

Chart created using Benzinga Pro

Nvidia's stock has dipped 11% from its November highs, settling at $132, while Broadcom has surged 46% in the past week to $250, pushing its forward earnings multiple to 40.16—higher than Nvidia's 30.96, according to Benzinga Pro data.

Read Also: Jim Cramer Warns Nvidia’s ‘Vicious’ And ‘Fast’ Reversal Is Coming Amid 174% Surge This Year And China Antitrust Probe

Bullish On Broadcom, Bearish On Nvidia?

Broadcom is riding a wave of optimism, fueled by its role in creating custom AI chips for tech giants like Alphabet Inc‘s Google and Meta Platforms Inc.

With its share price above all key moving averages, Broadcom's technical indicators are flashing bullish signs across the board. Nvidia, on the other hand, is grappling with a strongly bearish trend, trading below its eight, 20 and 50-day moving averages—a clear bearish signal from technical analysts.

Nvidia's Challenges Mount

In the past, Nvidia has enjoyed a good lead over its semiconductor peers. Its AI chip revenue saw a meteoric rise of 265% year-over-year in the fourth quarter of 2023, given its first-mover advantage in the AI chip space. Competition has emerged and strengthened considerably since then.

The company now also contends with uncertainties surrounding U.S.-China trade tensions, delays in its next-generation Blackwell chips, and internal hurdles with its server rack products.

Additionally, Google’s developing in-house AI chips could threaten Nvidia's long-term dominance.

Broadcom's Long-Term Bet

Broadcom's valuation surge reflects confidence in its future AI potential rather than immediate results.

The company's recent messaging emphasizes its strategic role in AI infrastructure, positioning itself as a critical player in the ongoing revolution.

Investors appear to be betting that this narrative will translate into sustained growth.

Despite the current dip, Nvidia's AI chips remain in high demand, and the long-term opportunity is still vast.

For investors, the recent pullback could be a momentary buying opportunity—but only if the company successfully navigates its regulatory, technological, and competitive challenges.

Read Next:

• Nvidia Technical Analysis Flashes Warning As NVDA Stock Slips Below Key Moving Averages, But Analysts Still See 18.11% Upside: Here’s More

Image: Shutterstock