1 Brilliant AI Stock That You Should Buy Hand Over Fist in 2026

Broadcom's (NASDAQ: AVGO) stock rallied nearly 600% over the past five years. Most of that growth was driven by its aggressive acquisitions and its brisk sales of AI chips. Let's see why it could still be one of the best stocks to buy in 2026 as the AI market continues to expand.

Why is Broadcom growing so rapidly?

From fiscal 2020 to fiscal 2025 (which ended last November), Broadcom's revenue grew at a 22% CAGR from $23.9 billion to $63.9 billion. Its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) rose at a 26% CAGR from $13.6 billion to $43.0 billion.

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Two catalysts fueled that expansion. First, it expanded its infrastructure software business through major acquisitions -- including its 2023 takeover of the cloud giant VMware -- to reduce its dependence on the cyclical semiconductor market. Second, it sold more networking, optical, and custom accelerator chips to data centers to support the latest AI applications.

Unlike Nvidia (NASDAQ: NVDA), which sells general-purpose data center GPUs for processing AI tasks, Broadcom sells customized AI accelerators for hyperscalers. In fiscal 2025, Broadcom's AI chip revenue surged 65% to $20 billion. That accounted for 31% of its top line and offset the slower growth of its non-AI chip and infrastructure software businesses.

Why will Broadcom continue to grow?

Broadcom aims to generate annualized AI chip revenues of $60 billion to $90 billion by the end of fiscal 2027, with most of that growth coming from just three of its hyperscale customers. That rosy outlook suggests the world's largest cloud companies are eagerly developing their own custom AI accelerators with Broadcom to curb their long-term dependence on Nvidia.

Broadcom will also likely continue to acquire more companies to fortify its AI chipmaking and infrastructure software businesses. Its non-AI chip businesses -- which sell a wide range of wireless, storage, networking, optical, and radio-frequency chips for other markets -- should also benefit from the long-term expansion of the mobile, automotive, and industrial sectors.

From fiscal 2025 to fiscal 2028, analysts expect Broadcom's revenue and adjusted EBITDA to grow at CAGRs of 38% and 36%, as those tailwinds kick in. With an enterprise value of $1.65 trillion, it still looks reasonably valued at 26 times this year's adjusted EBITDA.

So if you're looking for a balanced AI stock with plenty of upside potential, Broadcom checks all the right boxes. It might not attract as much attention as Nvidia, but it's also one of the best producers of picks and shovels for the ongoing AI gold rush.

Leo Sun has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.