The recent sell-off in AI infrastructure stocks has created buying opportunities in several semiconductor names. Despite fears of a slowdown in data center build-outs, spending on AI remains robust, making companies like Nvidia, AMD, and Broadcom attractive picks at discounted valuations.
Nvidia: A Bargain at 16 Times Forward Earnings
Nvidia's stock has pulled back, pushing its forward P/E to just 16 times fiscal 2028 estimates. This makes it one of the cheapest stocks in the chip sector. The company's CUDA software platform gives it a wide moat in AI model training, as most foundational AI code is optimized for its GPUs. Nvidia has also expanded into inference and agentic AI, with its acquisition of Groq adding inference-specific chips to its CUDA ecosystem. Its networking business is now the fastest-growing segment, reinforcing its position as a complete AI infrastructure provider.
AMD: Riding Inference and Agentic AI Trends
Advanced Micro Devices is well positioned for two major AI trends: inference and agentic AI. Inference relies more on fast memory access than raw compute power, and AMD's chiplet design allows for more memory per GPU. Its recent acquisition of MEXT further expands virtual memory capacity, helping customers cut costs. AMD also benefits from the rise of agentic AI, which increases demand for CPUs. The company projects the data center CPU market will double to $120 billion by 2030, and it is developing CPUs specifically for agentic workloads. With large GPU deals already secured with OpenAI and Meta, AMD offers significant growth potential.
Broadcom: Custom Chips Drive Explosive Growth
Broadcom has become a key player in custom AI accelerators, helping Alphabet develop its TPUs. Alphabet plans to spend up to $190 billion on AI infrastructure this year, and has agreed to sell Anthropic $21 billion worth of TPUs. Other hyperscalers are also turning to Broadcom for custom chips, and the company expects this business to exceed $100 billion in fiscal 2027. Citigroup projects Broadcom's AI revenue could reach $180 billion in fiscal 2028. Additionally, its data center networking business is growing fast, and a $30 billion deal with Apple signals a turnaround in its non-AI chip segment. Trading at just 20 times fiscal 2027 earnings, Broadcom looks undervalued given its growth trajectory.