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Broadcom ( AVGO +0.39% ) is one of the most intriguing semiconductor stocks in the market right now. Investors sent the stock soaring in 2025 and early 2026 based on its huge growth prospects, but enthusiasm has since waned, with the stock up just over 10% in the past year. However, its growth potential has arguably just gotten stronger during this stretch.
With just over $10,000, you could buy 27 shares of the stock. Broadcom is a leader in data center networking and ASIC (application-specific integrated circuit) technology. Both businesses are growing quickly due to the AI infrastructure boom, and they also tie into each other well.
Image source: The Motley Fool. On the networking side, Broadcom provides critical data center connectivity chips and hardware (Ethernet switches, DSPs, SerDes, NICs, etc.) that enable servers to transfer data quickly and efficiently distribute AI workloads. Its Tomahawk and Jericho chipsets are the industry standard for high-bandwidth data center switching and routing.
As AI chip clusters continue to expand, the importance of high-performance networking components that prevent data bottlenecks is increasing, making this a rapidly growing business. But the company's biggest opportunity is with AI ASICs. These are custom chips hardwired to perform specific tasks.
As hyperscalers (owners of large data centers) look to save money on their massive AI infrastructure spending, they are increasingly turning to custom AI ASICs, which are cheaper and generally more power-efficient since they are purpose-built. This also makes them great for inference . Broadcom is a leader in ASIC technology, holding roughly a 60% market share, as it provides key IP (intellectual property) and technical know-how to turn its customers' designs into physical chips that can be manufactured at scale.
Broadcom helped Alphabet develop its highly successful Tensor Processing Units (TPUs), and this will be its biggest growth driver in the coming years, with Alphabet and Anthropic as its two most important TPU customers. It has also helped Meta Platforms and OpenAI develop their own custom AI chips, with both companies just starting to ramp up. Overall, Broadcom has six customers for custom AI chips.
The company has projected that its ASIC revenue will double next year to $115 billion. It then expects that number to double again to $230 billion in fiscal 2028. Broadcom said that Anthropic will account for about 10 gigawatts of power in 2028 and OpenAI for 5 gigawatts, while Meta will deploy around 3 gigawatts through 2028.
It estimated that it is getting between $20 billion and $30 billion in content per gigawatt, so these are all huge deals. Premium Feature Moneyball Superscore 91 /100 Today's Change ( 0.39 %) $ 1.40 Current Price $ 361.54 Where could Broadcom trade in five years? Broadcom could see some of the most explosive growth in the semiconductor space today.
Analysts currently project the company's adjusted EPS will rise from $11.66 this fiscal year (ending October 2026) to $52.15 in fiscal 2031. Add another 10% EPS growth the following year, and it would generate adjusted EPS of $57.37 in fiscal 2032. The stock currently trades at a forward price-to-earnings (P/E) of roughly 20 times fiscal 2027 analyst estimates, a multiple I think the stock could maintain.
However, if we place a 15 to 20 times forward P/E multiple on the stock, that would have it trading between $860 and $1,150 in five years. A just over $10,000 investment (27 shares) would be worth between $23,200 and $31,000 in 2031. That's between a 130% return at the low end and a more than 200% gain at the high end.
With Broadcom potentially tripling over the next five years, the AI stock looks like a solid buy at current levels. The biggest risks to achieving these gains would be a slowdown in AI infrastructure spending and/or the company losing its primary role in helping key customers develop their custom AI chips.
Source: The Motley Fool
