AI Chip Stocks Diverge on Valuation Jitters

Shares of major semiconductor makers tied to artificial intelligence continued to move sharply on April 27, 2026, as investors weighed exceptional growth in data center demand against rising valuation concerns. Nvidia (NVDA), Advanced Micro Devices (AMD) and Broadcom (AVGO) all reported strong AI-driven results, but their stocks are reacting differently as analysts reassess upside after a powerful sector rally.

The moves come amid what AMD chief executive Lisa Su has described as only the second year of a "massive ten-year" AI infrastructure build-out. That view has reinforced expectations for sustained spending on compute capacity, even as some analysts warn that the current phase of the chip rally may have run ahead of fundamentals for certain names.

Nvidia remains at the center of the AI build-out. Its stock rose about 1.5% on Monday, pushing its market value above roughly $5.12 trillion. The company shipped an estimated 2,957,362 H100-equivalent GPUs in the fourth quarter of 2025, nearly two-thirds of measured AI compute capacity, according to Epoch AI.

That manufacturing scale is reflected in Nvidia’s recent results. For the fourth quarter of fiscal 2026, total revenue reached $68.127 billion, up 73.21% year over year, with data center revenue at $62.31 billion, up 75%. Data center networking revenue rose 263% to $10.98 billion, and non-GAAP gross margin held at 75.2%. Free cash flow in the quarter was $34.90 billion.

Nvidia has guided first-quarter fiscal 2027 revenue to about $78 billion, excluding data center compute revenue from China, and continues to return cash to shareholders, having distributed $41.1 billion in fiscal 2026 with $58.5 billion remaining under its repurchase authorization. Bank of America (BAC) reiterated its Buy rating, arguing that larger dividends or buybacks could be a new catalyst given the company’s free cash flow potential and valuation discount relative to other large technology stocks.

AMD has staged one of the sector’s strongest runs. Its shares are up about 65% in April and roughly 58% over the past month, with a 13.9% jump to a record $347.81 in the last session cited by GuruFocus and Zacks. The company reported fourth-quarter 2025 revenue of $10.27 billion, up 34.1% year over year, with data center revenue of $5.38 billion, helped by EPYC server CPUs and Instinct GPUs.

Analysts highlight a structural shift as newer agentic AI models increase demand for general-purpose CPUs alongside GPUs. D.A. Davidson’s Gil Luria raised his AMD price target to $375, pointing to stronger CPU demand as AI workloads grow more complex. CPU-focused articles note AMD’s EPYC processors are being deployed by major cloud providers including AWS, Oracle (ORCL), Google Cloud and Microsoft Azure.

At the same time, Northland Capital Markets downgraded AMD to Market Perform from Outperform with a $260 target, arguing the stock’s 133-times P/E and rapid share-price appreciation have stretched valuation. Northland’s Gus Richard characterized recent gains as driven by sentiment rather than fundamentals and flagged competition from Nvidia in AI GPUs and from Intel (INTC) in data center CPUs. Consensus price targets sit below current trading levels, and Wall Street’s overall stance is a Moderate Buy, according to GuruFocus.

Broadcom has emerged as another major beneficiary of AI infrastructure spending. The company’s first-quarter fiscal 2026 revenue reached a record $19.31 billion, up 29.47% year over year, with AI semiconductor revenue of $8.40 billion, up 106%. Its custom silicon franchise doubled year over year, supported by accelerator adoption across six hyperscalers, including new customer OpenAI.

Chief executive Hock Tan said Broadcom has "line of sight" to AI chip revenue in excess of $100 billion in 2027, with deployments approaching 10 gigawatts. Guidance for the second quarter of fiscal 2026 calls for $22 billion in total revenue and $10.7 billion from AI semiconductors. One analysis set a price target of $475.86 on the stock, with a bull-case scenario of $558.13, citing AI momentum and multi-year supply visibility through 2028, while also noting risks from customer concentration and semiconductor cyclicality.

The surge in AI hardware demand is being reinforced by large cloud customers. Alphabet’s (GOOGL) Google has worked with Broadcom to design Tensor Processing Units, which are described as helping lower AI model costs while maintaining performance. Google Cloud’s revenue grew 48% year over year in its most recent quarter, aided by AI adoption, and Alphabet’s (GOOGL) stock has climbed strongly over the past year.

Meta Platforms (META), Anthropic and other large-scale AI users are also cited as deploying Google’s TPUs or Nvidia- and AMD-based systems, contributing to a broad-based increase in computing investment. While some analysts see potential for AI infrastructure spending to cool by 2027, current commentary from chipmakers and cloud providers points to continued near-term expansion as agentic AI workloads proliferate.