Prediction: Broadcom Could Become One of the "Ten Titans" Growth Stocks, Alongside Nvidia and Five Others, Reaching a $2 Trillion Valuation by 2028

Broadcom ( AVGO 3.08%) posted strong financial results for the third quarter of fiscal 2025 this past Thursday, leading to a surge of over 4% in after-hours trading. Should these gains persist, Broadcom would reach a record high, having climbed more than 35% so far this year.

Yet, rather than reacting impulsively to earnings reports, it's more important to consider how these results influence the overall case for investing in the company. This latest performance reinforces an already persuasive growth trajectory that could propel Broadcom to become the seventh member of the "Ten Titans" group of growth stocks to exceed a $2 trillion market cap.

The Ten Titans are the ten largest U.S. companies focused on growth, ranked by market capitalization. They include:

• Nvidia
  
• Microsoft
  
• Apple
  
• Alphabet
  
• Amazon
  
• Meta Platforms
  
• Broadcom 
• Tesla
• Oracle
• Netflix

Together, these companies account for 38% of the S&P 500. Let’s take a look at why Broadcom continues to stand out as a leading artificial intelligence (AI) growth stock for those looking to invest for the long term.

Broadcom’s AI performance remains outstanding

Much like Nvidia’s main business shifted from gaming and visualization to data centers, Broadcom has evolved from a traditional semiconductor firm to a company with a significant presence in both semiconductors and infrastructure software, with a rising emphasis on AI.

Broadcom finalized its acquisition of VMware in November 2023, less than two years ago. The timing was ideal, as AI adoption and tech industry capital spending were accelerating. VMware’s addition made Broadcom a major force in virtualization and cloud management software. In the most recent quarter, infrastructure software represented 43% of total revenue, largely thanks to VMware.

Outside of software, Broadcom reported $9.17 billion in semiconductor solutions sales, with $5.2 billion attributed to AI. The company’s flagship AI offering is its custom AI accelerators, known as XPUs, which are advanced ASICs designed for large-scale cloud computing clients.

During the earnings call, Broadcom stated that XPUs generated 65% of its AI revenue this quarter. The remaining 35% likely comes from Tomahawk Ethernet switches (which connect XPUs within a server rack) and Jericho routers (which link XPUs across racks, clusters, and entire data centers). The latest Jericho4 Ethernet fabric router can interconnect as many as 1 million XPUs across multiple data centers, demonstrating Broadcom’s leadership in both chip engineering and networking technology.

Major cloud providers are fueling demand for Broadcom XPUs

On the call, Broadcom noted continued expansion with its three primary customers, all of whom work with Broadcom to develop custom chips for AI needs. The company also shared that it successfully converted one of its two top potential clients into a full customer, with that client placing a $10 billion order for AI racks—contributing significantly to Broadcom’s $110 billion order backlog.

Although the specific names of these customers remain undisclosed, it is widely believed that Alphabet and Meta Platforms are two of the established core clients, as both collaborate with Broadcom on custom chip solutions. The two top prospects are likely Apple and ByteDance, the parent company of TikTok.

Thanks to strong performance from its “Big 3”—now more accurately a “Big 4”—and other potential clients in the pipeline, Broadcom stated that its anticipated AI revenue for fiscal 2026 will far exceed previous guidance. For the immediate future, the company is forecasting an impressive $6.2 billion in AI revenue for the fourth quarter of fiscal 2024.

In just three years, Broadcom’s AI segment has soared from $3.8 billion in revenue for fiscal 2023 to a projected $12.2 billion for fiscal 2024, a 220% increase, and is on pace to reach a remarkable $19.9 billion in AI revenue in the current fiscal year.

Source: Broadcom.

Broadcom’s fourth-quarter projection points to a staggering 41% growth in AI revenue over just two quarters. Furthermore, its Q4 guidance of $17.4 billion in total revenue means that AI semiconductors are expected to make up 35.6% of the company’s overall revenue—up from 29% just two quarters earlier.

The road to a $2 trillion valuation

Earnings growth is the most influential factor in the stock market. Broadcom’s rapid expansion in AI and its strong integration of VMware indicate that the company’s momentum remains robust.

With a current market capitalization of $1.44 trillion, Broadcom needs to increase by 39% to hit the $2 trillion mark. Achieving 39% earnings growth within three years appears attainable for the company, but the bigger challenge will be sustaining its high valuation.

The stock currently trades at a forward price-to-earnings ratio of 45.9—surpassing even Nvidia’s valuation. In other words, if the share price stays flat and the company meets analysts’ projected earnings in the coming year, Broadcom would still be valued at 45.9 times those future earnings.

TSLA PE Ratio (Forward) information via YCharts

Broadcom’s elevated price stems from its stock rising more than 800% over the past five years, even though its earnings haven’t grown as quickly. The company’s valuation is largely based on the pivotal role its AI chips play in powering data centers and the continued expansion of large-scale data centers across the United States.

Broadcom remains a strong investment

In several respects, Broadcom is valued as if everything will go perfectly, and purchasing stocks with such high expectations can be risky—even if the company performs well. Nonetheless, management’s comments during the earnings call suggest Broadcom’s AI operations could expand much further as it builds on existing key clients and secures larger contracts with new ones.

Broadcom’s broad business portfolio—which spans data centers, cloud solutions, telecommunications, enterprise software, automation, robotics, consumer tech, networking, storage, cybersecurity, and beyond—positions it as one of the most robust U.S. companies in terms of earnings quality. Unlike Nvidia, which is more of a pure AI play, Broadcom resembles Microsoft in its exposure to multiple markets, although Broadcom’s growth rate currently exceeds Microsoft’s.

Overall, Broadcom stands among the top large-cap growth stocks available today, but it’s best suited for those who prioritize business fundamentals and aren’t deterred by a premium price tag. If Broadcom’s AI growth decelerates, the stock could see a pullback, so it’s most appropriate for investors with both a long-term outlook and a high tolerance for risk.