Broadcom's AI segment has seen remarkable growth, with revenue soaring from $3.8 billion last year to $12.2 billion in fiscal 2024.

The company commands a significant share of the application-specific integrated circuits market, controlling between 55% and 60%, which enhances its growth prospects.

In contrast, Stephen Yiu, portfolio manager of the Blue Whale Growth Fund, has reduced his investment in Nvidia, citing challenges for larger firms to achieve substantial growth.

Major tech companies like Microsoft, Meta, and Google are increasingly designing their own AI chips, reducing their reliance on Nvidia.

Despite Nvidia's impressive performance, its stock is perceived as expensive, with a price-to-sales ratio of 29 and an earnings multiple of 54, compared to the tech sector averages of 8.2 and a standard earnings multiple.

The competition in the AI chip market is intensifying, with Broadcom emerging as a formidable challenger to Nvidia, leveraging strategic partnerships and innovative chip solutions.

Broadcom's AI chips are being developed in collaboration with major players such as Meta, Alphabet, and ByteDance, further solidifying its position in the market.

Broadcom's organic revenue growth, excluding VMware acquisition revenue, was 9%, with projections of $14.6 billion in revenue for the first quarter of fiscal 2025, reflecting a 22% increase from the previous year.

Looking ahead, Broadcom estimates that the serviceable addressable market for custom AI and networking chips could reach between $60 billion and $90 billion by fiscal 2027.

Yiu suggests that for Nvidia to match Broadcom's projected growth, it would need to add $1.5 trillion to its market value, making Broadcom a more attractive investment for those seeking high returns in the AI sector.

While Broadcom's recent performance is impressive, some investors are contemplating profit-taking strategies, indicating a cautious approach amidst its growth.

Analysts are optimistic about Broadcom's future, forecasting a 19% revenue increase and a 28% rise in earnings per share for the current fiscal year.