Prediction: Broadcom Will Join Nvidia and 5 Other "Ten Titans" Growth Stocks in the $2 Trillion Club by 2028

Key Points

• Broadcom is growing artificial intelligence (AI) revenue at a breakneck pace.

• The company has plenty of levers to pull outside of AI to reward long-term investors.

• Broadcom is very expensive, requiring impeccable results to justify its valuation.

• 10 stocks we like better than Broadcom ›

Broadcom (NASDAQ: AVGO) delivered excellent third-quarter fiscal 2025 results this past Thursday, with the stock soaring over 4% in after-hours trading. If the gain holds, Broadcom will have reached a new all-time high and be up over 35% year to date.

However, it's best not to focus on knee-jerk reactions to earnings prints, but rather, how the earnings factor into the overall investment thesis. The company's results build upon a highly compelling growth story that could pole-vault Broadcom to become the seventh "Ten Titans" growth stock to surpass $2 trillion in market capitalization.

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The Ten Titans are the 10 largest U.S. growth-focused companies by market value, consisting of:

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

Combined, they make up 38% of the S&P 500. Here's why Broadcom remains one of the best artificial intelligence (AI) growth stocks for long-term investors to buy now.

Image source: Getty Images.

Broadcom's AI results continue to impress

Just as Nvidia's target market shifted from gaming and professional visualization to data centers, Broadcom has transformed from a semiconductor business to a hybrid semiconductor and infrastructure software company with a growing focus on AI.

Broadcom completed its acquisition of VMware less than two years ago in November 2023. The timing couldn't have been better, as AI adoption and capital expenditures were ramping up across the tech sector. VMware catapulted Broadcom into a major player in virtualization and cloud management tools. In Broadcom's latest quarter, infrastructure software made up 43% of total revenue, and a big reason for that is VMware.

Outside of software, Broadcom delivered $9.17 billion in semiconductor solutions revenue, $5.2 billion of which is from AI. Broadcom's main AI product is its custom AI accelerators, called XPUs, which are an advanced application-specific integrated circuit (ASIC) for hyperscale cloud computing customers.

On the earnings call, Broadcom said that XPUs made up 65% of AI revenue in the quarter. The other 35% likely comes from a combination of Tomahawk Ethernet switches that connect XPUs within a server rack and Jericho routers that connect XPUs across racks, clusters, and data centers. Broadcom's latest Jericho4 Ethernet fabric router can even connect upwards of 1 million XPUs across multiple data centers -- illustrating how Broadcom is a leader in both chip design and network connectivity.

A handful of hyperscalers are driving demand for Broadcom's XPUs

On the earnings call, Broadcom said that it continues to grow its business from its three core customers, which have been using Broadcom to design their own chips for AI applications. Broadcom also said that it converted one of its two top prospects into a qualified customer, and that customer has ordered $10 billion in AI racks, making up a big part of Broadcom's $110 billion backlog.

While we don't know exactly who these customers are, it's highly likely that two of the established core customers are Alphabet and Meta Platforms, given they both make custom chips with Broadcom, and that the two prospects are Apple and TikTok parent company ByteDance.

Due to the strong results from its "Big 3," now really a "Big 4," and other prospects in the pipeline, Broadcom said that fiscal 2026 AI revenue will improve significantly from what it indicated last quarter. And in the meantime, it's guiding for a whopping $6.2 billion in Q4 fiscal 2024 AI revenue.

In the span of just three years, Broadcom has taken its AI business from $3.8 billion in fiscal 2023 revenue, increased it by 220% in fiscal 2024 to $12.2 billion, and is now on track to deliver a staggering $19.9 billion in AI revenue this fiscal year.

Data source: Broadcom.

Broadcom's Q4 forecast implies a staggering 41% increase in AI revenue in just two quarters. What's more, Broadcom's Q4 revenue guidance of $17.4 billion means that AI semiconductor revenue alone is now projected to comprise 35.6% of total revenue. Just two quarters ago, AI revenue was 29% of total revenue.

The path to $2 trillion

There is nothing more powerful in the stock market than earnings growth. Broadcom's AI expansion and masterful integration of VMware suggest the company is showing no signs of slowing down.

Broadcom's market cap sits at $1.44 trillion, so it needs to gain 39% to get to $2 trillion. The company should have no problem growing earnings by 39% in three years. Rather, the challenge will be maintaining its lofty valuation.

The stock sports a forward price-to-earnings ratio of 45.9 -- making it even more expensive than Nvidia. This metric essentially means that if Broadcom's stock price remained unchanged and it achieved analyst consensus earnings estimates over the next 12 months, it would still trade at 45.9 times those forward earnings.

TSLA PE Ratio (Forward) data by YCharts

Broadcom is expensive because the stock price is up more than 800% in the last five years, but it still hasn't grown earnings that quickly. Rather, Broadcom is being valued for the role its AI chips are playing in data centers, and the multiyear build-out of larger data centers across the U.S.

Broadcom is still a buy

In many ways, Broadcom is priced for perfection, and buying a stock when expectations are ultra-high can backfire even if the company delivers decent results. However, management's commentary on the earnings call suggests that Broadcom's AI business could get much bigger as it builds upon its existing key accounts and converts more prospects into big-time customers.

Broadcom's diversified business model across data centers, cloud computing, telecom, enterprise software, automation, robotics, consumer electronics, networking, storage, cybersecurity, and more makes it arguably one of the best U.S. companies from an earnings quality standpoint. Broadcom is less of a pure-play AI stock than Nvidia. It's similar to Microsoft in that it has exposure to several end markets, but it is growing faster than Microsoft.

All told, Broadcom is one of the best megacap growth stocks to buy now, but only for investors who value the quality of the underlying business and don't mind paying an expensive price. If Broadcom's AI growth slows, the stock will likely sell off, so Broadcom is only worth approaching if you have a high risk tolerance and a long-term investment time horizon.

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Daniel Foelber has positions in Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Netflix, Nvidia, Oracle, and Tesla. The Motley Fool recommends Broadcom and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.