Nvidia (NVDA) vs. Broadcom (AVGO): Which AI Stock Is a Better Buy After the OpenAI Scare? Jabran Kundi Mon, October 12, 2026 at 4:41 PM EDT 4 min read OPAI.PVT AVGO -1.88% NVDA -1.29% Explore stocks on Coinbase Trading disclosure Trading disclosure The above button links to Coinbase. Yahoo Finance is not a broker-dealer or investment adviser and does not offer securities or cryptocurrencies for sale or facilitate trading. Coinbase pays us for certain activity generated through this link. Prices displayed are informational.
On October 8, the Financial Times reported that OpenAI's annualized revenue was about $50 billion, roughly $20 billion below figures widely reported in September. AI stocks sold off. Nvidia Corporation (NASDAQ:NVDA) dropped about 3%, erasing roughly $170 billion in value, while Broadcom Inc. (NASDAQ:AVGO) fell more than 4%. Just hours later, Bloomberg reported that OpenAI expects to reach or exceed $70 billion in annualized revenue by year-end. The gap came down to how revenue was counted.
The higher figure includes sales through OpenAI's cloud partners, which OpenAI's own number leaves out. Bloomberg's report suggests OpenAI could reach $70 billion in annualized revenue by year-end, although achieving that target would require substantial growth from September's $50 billion run rate. If the market overreacted to OpenAI's revenue figures, the selloff may have created buying opportunities. These AI stocks may deserve a closer look.
Nvidia sells to nearly every major AI lab and cloud provider, so one company's revenue figure says little about its overall demand. Jensen Huang said last month that Nvidia expects to double the number of chips it sells in 2027, and management has guided to about 70% revenue growth in fiscal 2028. The company also added a record $150 billion to its buyback, a strong sign of confidence in its cash flow.
The valuation makes the selloff even harder to justify. The forward non-GAAP P/E of 25.50x sits about 40% below its 5-year average of 42.15x. Similarly, the forward Price-to-sales ratio of 13.93x is 29% below its average of 19.67x. So even while sitting at the center of the AI boom, Nvidia's stock trades at a considerable discount. The EPS outlook is solid. Analysts expect earnings to grow 95% this fiscal year and 71% the next. Based on fiscal 2028 earnings, the P/E falls to about 15x.Nvidia held approximately $23.2 billion in net cash, including marketable debt securities, as of July 26, 2026. The stock's valuation may look more attractive than the recent sell-off suggests, but it's not the only stock near record levels that Wall Street is watching. See the 10 best stocks near all-time highs to buy, with NVDA ranked No. 1.
Broadcom's link to OpenAI is more direct. It's building OpenAI's custom AI chips under a 10-gigawatt deal. The night before, the Wall Street Journal reported that the company was working to arrange more than $50 billion in financing tied to that work. Talks were described as early, and Bloomberg's account put the debt at about $30 billion for the next phase. Landing a day ahead of the OpenAI revenue headline, the report made the risk look bigger. Even so, the financing is still in early talks, and the $70 billion is a projection, not cash in hand. The chip rollout extends through 2029, meaning OpenAI's growth must continue well beyond this year.
Broadcom's forward non-GAAP P/E of 32.30x sits about 18% above its 5-year average of 27.34x. Its forward Price-to-sales ratio of 16.96x is roughly 30% above its average of 13.06x. The EPS outlook helps justify the premium. Analysts expect earnings to grow 71% this fiscal year and 66% the next. Based on fiscal 2027 earnings, the P/E drops to about 19x. Broadcom ranked No. 6 on our list of the 10 Best Pick and Shovel AI Stocks to Buy for the Long Term. See which five stocks ranked higher. The risk for investors is concentration. If OpenAI falls short, Broadcom will feel it more than Nvidia.
Hedge funds had been adding to Nvidia. The number of funds holding it rose from 275 in Q1 to 285 in Q2, and stakes grew from $83.9 billion to $94.7 billion. Broadcom's fund count slipped from 173 to 170, and stakes fell from $32.8 billion to $29.1 billion.
I think investors who sold these two on the OpenAI headline sold for the wrong reason. The selloff treated an accounting difference like a drop in demand, even though OpenAI still expects to hit $70 billion by year-end, a target that remains uncertain. For those looking to buy the dip, Nvidia looks like the safer option, while Broadcom offers more upside potential but also greater risk, if OpenAI delivers.
While we acknowledge the potential of NVDA as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.
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