Qualcomm vs. Broadcom: One AI Stock Is a Buy, the Other Is a Wait-and-See, Says Top Bernstein Analyst

Qualcomm (NASDAQ:QCOM) and Broadcom (NASDAQ:AVGO) compete across several important areas of the semiconductor industry, although their businesses have traditionally been built around very different markets. Qualcomm is best known for its smartphone processors, wireless technology and extensive portfolio of communications patents, while Broadcom has built a much broader semiconductor operation spanning networking, connectivity, custom accelerators and infrastructure software.

Both companies, however, are now looking to capture a greater share of the enormous spending on AI infrastructure, putting them in competition for some of the same opportunities as data centers become ever more reliant on specialized chips and high-speed connectivity.

Broadcom already has a substantial position in custom AI silicon, working with some of the world’s largest technology companies, while Qualcomm is attempting to establish itself as a meaningful player in the market. That effort received a significant boost this week when Qualcomm announced a multigenerational collaboration with Amazon to develop customized AI data center chips and advanced optical connectivity solutions for AWS.

Bernstein’s Stacy Rasgon, an analyst who ranks among the top 1% on Wall Street, sees the Amazon agreement as meaningful confirmation of Qualcomm’s existing data center ambitions, rather than a reason to raise his forecasts at this stage.

After speaking with the company’s investor relations team, Rasgon said the deal does not appear to be incremental to Qualcomm’s current targets of $5 billion in fiscal 2027 revenue and $15 billion in fiscal 2029. However, Qualcomm indicated that the agreement gives it “very high confidence” in achieving those goals.

Rasgon also pointed to the potential scale of the partnership, noting that as much as $60 billion in commitments over 10 years could provide additional support for Qualcomm’s longer-term outlook, assuming the products ultimately reach the market. The deal also confirmed that Amazon is one of Qualcomm’s two hyperscale data center customers, something that had been widely speculated but had not previously been disclosed.

Additionally, Amazon’s initial purchase commitments will trigger 3.75 million warrants for Qualcomm. Rasgon estimates that the commitments could be worth roughly $9 billion if the warrants vest at a steady rate, although the timing remains unclear. Revenue from the agreement is also expected to begin in the December quarter.

The agreement, however, doesn’t alter Rasgon’s stance. “This deal may help provide more proof points for current targets (and it sounds like we may get more of them over time), though it appears to be more a clarification on the current trajectory vs providing for upside which may temper reaction for now,” the 5-star analyst said.

Bottom line, Rasgon rates QCOM stock as Market Perform (i.e., Neutral) with a $165 price target. That suggests the stock is overvalued by 5%.

Rasgon also covers Broadcom, and assessing the chip giant’s latest earnings, he says investors were primarily looking beyond the immediate results to the company’s prospects for 2027 and beyond, and in his view, Broadcom delivered.

The company’s increase to its fiscal 2027 AI revenue forecast was relatively modest, lifting the target to approximately $115 billion from $100 billion, although that would still represent a doubling from the prior year. More strikingly, management laid out an enormous opportunity for fiscal 2028, projecting another doubling in AI revenue to $230 billion, a figure Rasgon believes could come in well above current expectations. Broadcom also indicated that underlying demand is even stronger, reaching 10 gigawatts in 2027 and 20 gigawatts in 2028, with further upside possible if the company can secure additional supply, land, power and data-center capacity.

Looking at the bull and bear arguments, Rasgon notes that bears could point to Broadcom becoming more dependent on Anthropic and OpenAI as Google’s contribution to the business declines, with those customers representing 10 gigawatts and 5 gigawatts of expected demand, respectively, in fiscal 2028.

Bulls, however, can argue that Google should remain a large and dependable customer, potentially generating tens of billions of dollars in annual revenue through the end of the decade even if it falls from Broadcom’s largest customer to its third-largest. They could also contend that the AI labs’ ambitious spending plans now appear more credible.

Which side does Rasgon fall on? “We land well on the bull side of this argument at this point,” he said.

Accordingly, Rasgon rates the stock as Outperform (i.e., Buy). (To watch Rasgon’s track record, click here)

As for the Street’s general views here, QCOM stock claims a Moderate Buy consensus rating, with its $204.75 average price target implying the stock will gain 18% in the months ahead. AVGO boasts a Strong Buy consensus view, while its $521.41 average target points toward one-year returns of 41.5%. (See QCOM stock forecast or AVGO stock forecast)