Broadcom’s custom AI units are addressing different segments of the computing market.
10 stocks we like better than Nvidia ›
Artificial Intelligence (AI) spending is not expected to slow down anytime soon, let alone in 2026. AI hyperscalers have informed investors that data center spending is expected to increase in 2026. So there are several companies that look promising right now.
I think these three stocks are all great places to invest $1,000, and investors should act quickly before the market decides to give these stocks a higher premium than they currently receive.
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NVIDIA(NASDAQ: NVDA) It’s been at the top of nearly every AI investment ranking since 2023, and for good reason: It’s well-positioned for massive growth. Nvidia’s graphics processing unit (GPU) is the primary computing unit used to train and run artificial intelligence models, and its rise to become the world’s largest company by market capitalization may be directly related to the development of generative artificial intelligence.
Although Nvidia has been a very successful investment over the past few years, I think 2026 will be better than 2025. Nvidia enters this year with a lower valuation than it will have at this point in 2025. Last year, Nvidia stock traded at 50 times forward earnings — a hefty price tag. Currently, at 40 times forward earnings, I think Nvidia is still slightly expensive, but the premium is well worth it for the growth it will deliver.
Wall Street analysts expect revenue to grow 50% in fiscal 2027 (ending January 2027). This is a strong performance after several strong results last year, and it shows that AI spending is not slowing down or making any progress.
As a result, Nvidia will continue to be a top investment choice in the AI space, and I think every growth investor should invest in Nvidia stock.
AMD(NASDAQ:AMD) It hasn’t had the same success as Nvidia in the field of artificial intelligence. It has struggled to match Nvidia’s ecosystem, although there are signs it’s improving. Its control software ROCm has always been considered an inferior version of Nvidia’s software CUDA. However, AMD reported that ROCm downloads increased tenfold year-over-year through November 2025, indicating that AMD’s software is starting to become more popular. This could be a sign that the AI company is doing some research into how well AMD’s products are performing, and it could start taking some emerging market share away from Nvidia.
Management believes it can do this, telling investors it expects its data center business to grow at a compound annual growth rate (CAGR) of 60% through 2030. This is a huge acceleration compared to AMD’s performance over the past few years, and if management can deliver on these expectations, AMD will be on a tear in 2026.
Broadcom(NASDAQ:AVGO) It’s not getting into AI computing in the same way as AMD or Nvidia. Both companies offer GPUs that perform well in a wide range of computing environments. However, most AI workloads are quite mature and could use some optimization. This is an area Broadcom is pursuing as it works with AI hyperscalers to design custom AI chips, known as ASICs (Application Specific Integrated Circuits). These computing devices are designed with the end workload in mind, so they are more optimized than GPUs. This results in better performance at a lower price, but at the cost of flexibility.
Broadcom’s products won’t completely replace GPUs, but they will complement them, and we’re already seeing some impact of the popularity of these cheaper alternatives on Broadcom’s business. In the fourth quarter of fiscal 2025 (as of November 2), its AI semiconductor revenue increased 74% year-on-year to $6.5 billion. The business is expected to double year over year to $8.2 billion in the first quarter.
That’s huge growth and shows how much Broadcom can benefit from these custom devices in the future. Broadcom is working with several other hyperscalers to design its own chips, so this growth is just the beginning. I think Broadcom is an excellent investment along with Nvidia and AMD, and these three stocks should significantly outperform the market over the next five years due to heavy AI spending.
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Keithen Drury works at Broadcom and Nvidia. The Motley Fool has a position and recommends Advanced Micro Devices and Nvidia. “Motley Fool” recommends Broadcom. The Motley Fool has a disclosure policy.
Got $3,000? 3 Artificial Intelligence (AI) Stocks to Buy and Hold for the Long Term Originally published by The Motley Fool
