Contrasting Strategies: A Look at AMD and Broadcom
AMD’s remarkable rise has been built on its success against Intel, Nvidia, and the expansion into various markets including data centers and artificial intelligence. A significant move included the acquisition of Xilinx, broadening its embedded chip offerings with FPGA capabilities.
On the flip side, Broadcom, while offering a diverse range of chips, relies heavily on key sales to Apple. Recent strategic acquisitions like CA Technologies and VMware have helped in building a robust software business which aims to constitute a larger part of its revenue.
Examining Growth Trajectories
In 2022, AMD witnessed a significant surge in revenue and adjusted EPS, primarily driven by the Xilinx acquisition. However, in the subsequent year, a slowdown in PC CPU and GPU sales, notably in consoles like PS5 and Xbox Series, resulted in a dip. Despite this, sales of Epyc CPUs and Instinct GPUs for data centers showed promise.
Looking ahead to 2024, analysts project a positive upswing for AMD with revenue and adjusted EPS expected to climb. This resurgence comes as the PC market stabilizes and the company increases its distribution of Instinct GPUs for AI applications.
Contrastingly, Broadcom experienced sturdy growth in fiscal 2022, driven by robust sales across multiple markets. The company’s software business, along with steady data center chip sales for AI applications, buoyed its performance.
For fiscal 2023, Broadcom sustained growth, with analysts foreseeing a further uptick in 2024 thanks to the VMware acquisition. The stock continues to appear reasonably valued with a forward dividend yield and a stable growth projection.
The Investment Decision: Why Broadcom Might Have the Edge
Both AMD and Broadcom offer promising prospects in the semiconductor arena. However, Broadcom’s diversified portfolio, steady growth trajectory, favorable stock valuation, and dividend payout make it a potentially stronger pick at the moment. With AMD still facing the AI hype bubble, Broadcom emerges as the steadier contender in the ongoing chip battle.
