Prediction: This Unstoppable Stock Will Rejoin the $2 Trillion Club by 2027

The U.S. is home to 11 companies worth at least $1 trillion, but only six of them are currently worth $2 trillion or more. Semiconductor giant Broadcom (NASDAQ: AVGO) used to be in that exclusive club, but its stock is currently down 23% from its June peak amid concerns about the sustainability of the global artificial intelligence (AI) infrastructure build-out.

Broadcom supplies data center processing chips and components necessary to run AI training and inference workloads, so its stock price can be highly sensitive to any hint of a slowdown in infrastructure spending. Over the last few months, many large companies have imposed AI usage limits on their employees and pivoted workloads to cheaper models to save money. That doesn't bode well for semiconductor demand.

However, Broadcom's latest quarterly report suggests it still has plenty of growth in the tank. The company had a market capitalization of $1.77 trillion as of the market close on Tuesday, Sept. 8, and here's why I predict it will rejoin the $2 trillion club before 2027.

Image source: Getty Images.

Broadcom's data center chips are quickly becoming best-in-class

Nvidia's graphics processing units (GPUs) are the world's best out-of-the-box data center chips for AI workloads. However, AI companies like OpenAI, Anthropic, Alphabet, and Meta Platforms are increasingly opting for specialized solutions to fulfill their specific needs, so Broadcom is helping them design and fabricate custom AI accelerators.

Alphabet has a long-term partnership with Broadcom spanning multiple generations of its custom data center chips, which are called Tensor Processing Units (TPUs). Alphabet monetizes these chips in a few ways. First, it uses them to further improve its Gemini AI models, which generate revenue through platforms like Google Search. Second, it rents TPUs to developers via its Google Cloud platform. And third, it's now selling TPUs directly to customers like Anthropic.

Broadcom recently started shipping Alphabet's new v8i TPU, which it says surpasses Nvidia's latest Vera Rubin GPU systems in terms of performance. Broadcom says each successive generation of Alphabet's TPUs through 2028 and 2029 will experience growing demand, particularly from Anthropic, which is expected to become the chipmaker's largest buyer next year.

But Anthropic's biggest rival, OpenAI, won't be buying Alphabet's TPUs. Instead, it designed an entirely different accelerator with Broadcom's help, called Jalapeño, which is comparable to Vera Rubin, specifically for OpenAI's workloads. Broadcom says optimizing an accelerator for a specific large language model (LLM) is the secret to outperforming any GPU. Plus, it means AI companies aren't locked into a closed ecosystem with suppliers like Nvidia, with no control over pricing or innovation.

Revenue growth is accelerating, signaling strong momentum

Broadcom generated $29.6 billion in total revenue during its fiscal 2026 third quarter (ended Aug. 2), a whopping 86% increase from the year-ago period. That growth rate accelerated sharply from the second quarter just three months earlier, when revenue jumped by 48%.

AI semiconductor sales accounted for $16.7 billion of Broadcom's total revenue in the third quarter, up by a staggering 221%, so they were the driver of the company's spectacular overall growth. Management issued a forecast suggesting AI semiconductor sales could grow at an even faster pace of 236% in the current fourth quarter, to come in at $21.7 billion.

Broadcom chief executive Hock Tan also told investors that AI revenue could come in at a record high of $115 billion in fiscal 2027, and then double to $230 billion in fiscal 2028. He said a lack of supply is the only reason growth won't be even faster -- if the company finds a way to manufacture more chips, it could immediately generate additional revenue because demand is so strong.

Broadcom's incredible revenue growth is also benefiting its bottom line. The company delivered net income of $13.1 billion during the third quarter, more than tripling compared to the year-ago period.

Broadcom stock isn't cheap, but there is still room for modest upside

Based on Broadcom's trailing-12-month revenue, its stock is trading at a price-to-sales (P/S) ratio of 20.2, nearly double its 10-year average of 10.5. From that perspective, the stock doesn't look like a very attractive investment at the current price.

However, Wall Street thinks the company will generate $173 billion in total revenue during fiscal 2027 (according to Yahoo Finance), placing its stock at a forward P/S ratio of just 10.1. And if we assume the company stays on track to double its AI revenue in fiscal 2028 as Tan predicts, then its forward P/S ratio is even lower.

AVGO PS Ratio data by YCharts

Considering Broadcom's current market cap is $1.77 trillion, its stock only has to rise by a modest 13% to rejoin the exclusive $2 trillion club. I think that gain could materialize over the next few months, because investors will soon start pricing in some of the forecast growth for fiscal 2027, which begins in early November.

Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Broadcom, Meta Platforms, and Nvidia. The Motley Fool has a disclosure policy.