Is Broadcom the Best Chip Stock to Buy as Q4 Earnings Approach?

As one of the few companies positioned to rival Nvidia NVDA in custom AI chips, the market is heavily anticipating Broadcom’s AVGO fiscal fourth quarter results on Thursday, December 11.Thanks to its central role in the artificial intelligence boom, Broadcom stock has spiked +75% in 2025, impressively outperforming the broader market and Nvidia’s +38%.Needless to say, the question of whether Broadcom is the best chip stock to invest in is certainly arising ahead of its Q4 report, with AVGO near a 52-week high of over $400 a share. Image Source: Zacks Investment Research AI Infrastructure Demand & VMware ExpansionBeing a critical supplier of custom accelerators and networking products for hyperscale data centers, Broadcom's stock has continued to rally this year after securing major partnerships with hyperscalers like Alphabet GOOGL and OpenAI to produce specialized AI chips.Beyond chips, Broadcom’s VMware Cloud foundation and infrastructure software business is expanding, improving margins, and revenue visibility. Broadcom’s infrastructure software division, which now includes VMware, most recently reported $6.78 billion during its fiscal third quarter, up 17% year-over-year. Furthermore, before acquiring VMware in 2023, Broadcom’s quarterly infrastructure software revenue was under $2 billion, with the company now becoming a full-stack AI infrastructure vendor. Broadcom’s Q4 ExpectationsBroadcom’s top line is thought to have stretched 24% during Q4 to $17.5 billion compared to $14.05 billion in the comparative quarter. Notably, analysts expect AI-related revenues to surge 66% year over year to $6.2 billion. More importantly, Q4 EPS is expected to spike 32% to $1.87 versus $1.42 per share a year ago. AVGO Valuation ComparisonAt 43X forward earnings, Broadcom stock is not trading at a stretched premium to its Zacks Electronics-Semiconductors Industry average of 36X or Nvidia’s 40X. However, it’s noteworthy that AVGO is well above its five-year median of 17X forward earnings after recently trading at a high of 71X during this period.Image Source: Zacks Investment Research Bottom LineWhile Nvidia dominates GPUs (graphic processing units), Broadcom’s custom ASICs (application-specific integrated circuits) are gaining traction for specialized AI workloads. The key difference is that GPUs are flexible, general-purpose parallel processors, while ASICs are highly specialized chips designed for one task, making them far more efficient but less versatile.Still, the integration of VMware has done wonders to diversify Broadcom’s business as a full-stack AI infrastructure vendor. Broadcom stock currently lands a Zacks Rank #3 (Hold) as reaching or exceeding its Q4 expectations and offering positive guidance will be critical to reconfirming the tech giant’s enticing growth trajectory and justifying its valuation. Radical New Technology Could Hand Investors Huge GainsQuantum Computing is the next technological revolution, and it could be even more advanced than AI.While some believed the technology was years away, it is already present and moving fast. Large hyperscalers, such as Microsoft, Google, Amazon, Oracle, and even Meta and Tesla, are scrambling to integrate quantum computing into their infrastructure.Senior Stock Strategist Kevin Cook reveals 7 carefully selected stocks poised to dominate the quantum computing landscape in his report, Beyond AI: The Quantum Leap in Computing Power.Kevin was among the early experts who recognized NVIDIA's enormous potential back in 2016. Now, he has keyed in on what could be "the next big thing" in quantum computing supremacy. Today, you have a rare chance to position your portfolio at the forefront of this opportunity.See Top Quantum Stocks Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Broadcom Inc. (AVGO): Free Stock Analysis Report NVIDIA Corporation (NVDA): Free Stock Analysis Report Alphabet Inc. (GOOGL): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks