Key Takeaways:
- The AI arms race is expected to continue beyond 2026, with increased spending on data centers and AI technology.
- Nvidia, AMD, and Broadcom are well-positioned to benefit from this trend and are promising investment opportunities.
- These companies are expected to experience significant growth in the coming years, with Nvidia predicted to deliver 50% revenue growth in fiscal year 2027.
- AMD is improving its ecosystem and may capture emerging market share from Nvidia, while Broadcom is partnering with AI hyperscalers to design custom AI chips.
Introduction to the AI Arms Race
The AI arms race is set to continue well past 2026, with artificial intelligence (AI) spending expected to increase significantly in the coming years. As the article states, "The AI hyperscalers have all informed investors to expect increased data center spending in 2026." This trend is expected to benefit several companies, including Nvidia, AMD, and Broadcom, which are well-positioned to capture huge growth in the AI market. According to the article, "Nvidia’s graphics processing units (GPUs) are the primary computing units used to train and run AI models, and its rise to become the world’s largest company by market cap can be directly tied to the generative AI build-out."
Nvidia’s Position in the AI Market
Nvidia has been at the top of nearly every artificial intelligence investing list since 2023, and for good reason. As the article notes, "Nvidia enters the year trading at a lower valuation than at this point during 2025." With a forward price-to-earnings ratio of 40, Nvidia is still considered slightly expensive, but the premium is well worth the growth it’s delivering. Wall Street analysts expect 50% revenue growth for Nvidia in fiscal year 2027, which is a strong performance after several strong results in previous years. As the article states, "That’s a strong performance after several strong results in previous year, and it showcases that AI spending isn’t slowing down or going anywhere." Nvidia’s success can be attributed to its GPUs, which are the primary computing units used to train and run AI models.
AMD’s Improving Ecosystem
AMD, on the other hand, has struggled to match Nvidia’s success in the AI realm. However, there are signs that it’s improving. As the article notes, "AMD reported that ROCm downloads had increased tenfold year over year in November 2025, showcasing that AMD’s software is starting to become more popular." This could indicate that AI companies are investigating how well AMD’s products work, and it could start to capture some emerging market share from Nvidia. Management believes that AMD is positioned to deliver a 60% compound annual growth rate (CAGR) from its data center business through 2030, which is a huge acceleration from where AMD has been over the past few years. As the article states, "Management believes it is positioned to do just that, and told investors to expect a 60% compound annual growth rate (CAGR) from its data center business through 2030."
Broadcom’s Custom AI Chips
Broadcom is approaching the AI computing world in a different manner than AMD or Nvidia. Instead of offering GPUs, Broadcom is partnering with AI hyperscalers to design custom AI chips, known as ASICs (application-specific integrated circuits). These computing devices are designed with an end workload in mind, so they are far more optimized than a GPU. As the article notes, "These computing devices are designed with an end workload in mind, so they are far more optimized than a GPU." This can lead to better performance at a lower price, all at the cost of flexibility. Broadcom’s products won’t replace GPUs entirely, but they will supplement them, and the company is already seeing significant growth in its AI semiconductor revenue. In the fourth quarter of fiscal year 2025, its AI semiconductor revenue increased 74% year over year to $6.5 billion, and it expects this business to double year over year to $8.2 billion in the first quarter.
Conclusion and Investment Opportunities
In conclusion, the AI arms race is expected to continue beyond 2026, with increased spending on data centers and AI technology. Nvidia, AMD, and Broadcom are well-positioned to benefit from this trend and are promising investment opportunities. As the article states, "I think these three make for great places to invest $1,000 each in, and investors should act quickly before the market decides to give these stocks a greater premium than what they currently have." With significant growth expected in the coming years, these companies are likely to outperform the market and provide strong returns for investors. As the article notes, "I think Broadcom is an excellent investment to make alongside Nvidia and AMD, and all three of these stocks should greatly outperform the market over the next five years due to massive AI spending."
https://www.fool.com/investing/2026/01/18/got-3000-3-artificial-intelligence-ai-stocks-to-bu/
