Best AI Stocks to Buy During the Stock Market Crash: Nvidia Stock or Broadcom Stock? | NVDA vs. AVGO
Summary
Parkev conducts a head-to-head comparison of Nvidia (NVDA) and Broadcom (AVGO), two key players in the accelerated computing chips and networking equipment vital for the rapidly expanding data center industry. His analysis focuses on revenue, operating profit margins, and valuation metrics to determine which stock is the better buy at current market prices.
Parkev highlights that while both companies have shown phenomenal growth, Nvidia has significantly surpassed Broadcom, especially since 2023. Nvidia's most recently reported annual revenue was $216 billion, compared to Broadcom's $64 billion, even after Broadcom's acquisition of VMware. Looking ahead to fiscal year 2028, Nvidia's revenue is projected to explode from $216 billion to $548 billion, while Broadcom is forecasted to grow from $64 billion to $218 billion. Nvidia is expected to capture substantially more revenue growth.
Nvidia demonstrates a significantly higher operating profit margin of 62.4% in the most recently completed period, far exceeding Broadcom's 39.9%. Parkev acknowledges that Broadcom's margin is remarkable for any business, stating that 40% is an ecstatic achievement, but Nvidia's performance makes most businesses, including Broadcom, "look like junior partners." This indicates Nvidia's superior efficiency and pricing power within its operations, excluding gains from equity investments like OpenAI.
Parkev finds it surprising that Nvidia stock is trading at a lower valuation than Broadcom when measured on a forward price-to-earnings (P/E) basis. Broadcom trades at a forward P/E of 31, while Nvidia trades at a forward P/E of 21. Parkev considers Nvidia "significantly undervalued" given its excellent prospects and fantastic results, especially noting its underperformance relative to other AI ecosystem stocks that have "soared." He also points out that Nvidia's valuation is roughly 1/10th that of Tesla, highlighting what he perceives as market irrationality.
Using his customized DCF model, Parkev calculated a fair value for Broadcom at $498 per share, against a current market price of $419. This suggests Broadcom is undervalued, particularly after its stock price fell over 12% following recent quarterly earnings which Parkev considered strong, but the market had expected even more. Similarly, he calculated Nvidia's fair value at approximately $308 per share, compared to its current market price of $219, indicating that Nvidia is also meaningfully undervalued.
In conclusion, Parkev states that if he had to choose between the two, he would rather buy Nvidia stock at current prices. He believes Nvidia is the better company and is selling at a lower valuation. He rates both stocks as a "buy," with Nvidia being ranked in his top 12 stocks and Broadcom still on his buy list, despite previously being removed when its price surged too high.
Mentioned Stocks
Reasoning: Parkev rates Broadcom as a buy, acknowledging its strong position in networking equipment for data centers. Broadcom reported $64 billion in annual revenue, projected to grow to $218 billion by fiscal year 2028. Its operating profit margin of 39.9% is considered "remarkable" by Parkev. However, it trades at a higher forward P/E of 31 compared to Nvidia. His discounted cash flow model suggests a fair value of $498 per share, against a current market price of $419 per share, indicating it is undervalued, especially after a recent 12.5% stock price drop following earnings. Parkev had removed Broadcom from his top buy list earlier because its price had increased "a little bit too much" but it is still rated as a buy and he explicitly states that viewers can own it as he rates it a buy.
Reasoning: Parkev rates Nvidia as a buy and would rather buy it over Broadcom due to its superior performance across multiple metrics and a surprisingly lower valuation. Nvidia significantly leads in revenue growth, with current annual revenue at $216 billion, projected to reach $548 billion by fiscal year 2028. Its operating profit margin is an exceptional 62.4%. Despite its strong fundamentals and future prospects, Nvidia trades at a forward P/E of 21, which Parkev considers "significantly undervalued." His customized discounted cash flow model calculates a fair value of $308 per share compared to its current market price of $219 per share, indicating it is meaningfully undervalued. Parkev states he bought Nvidia stock around $90 per share (specifically after tariffs announced in April 2025) and would rather buy it at current prices.