Poised for Explosive Growth: 2 AI Stocks That Could Surge 100% or More by 2030

Key Points

• Broadcom's AI chip business is booming, with revenue surging 63% year over year last quarter.

• The AI server market is expected to grow 55% this year, which is a tailwind for Dell.

• 10 stocks we like better than Broadcom ›

Artificial intelligence (AI) is a must-have technology for businesses to compete in the 21st century. It promises to lower costs, speed up product development, and automate tasks. This is why spending on AI infrastructure is expected to reach into the trillions in the next five years.

The following companies provide the essential chips and servers for AI. Here's why investors could at least double their money in these stocks through the end of the decade.

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Image source: Getty Images.

1. Broadcom

The next five years are likely to see a significant ramp in spending for data centers. Data centers require thousands of chips, miles of cables, and software to monitor performance. Broadcom (NASDAQ: AVGO) supplies chips and networking products for a range of markets, but its data center business is exploding. The stock is up 48% year to date with room to run.

Broadcom is a well-managed business that has delivered a 2,500% cumulative return to shareholders over the last 10 years. In the most recent quarter, it reported a 22% year-over-year increase in revenue. Its revenue and earnings per share have grown at a compound annual rate of 28% over the last 10 years.

This consistent growth is based on Broadcom's leadership in the markets where it operates. Management focuses on high-margin products that offer attractive growth prospects. AI chips are driving most of the company's growth right now, with AI revenue up 63% year over year last quarter.

More data centers will get built, which just extends the addressable market for Broadcom's networking products. Data centers will need more switches, routers, and Ethernet cables to connect hundreds of computing racks. Broadcom is well-positioned to meet this demand with its Tomahawk 6 and Jericho Ethernet switches, which deliver high data transfer speeds with low latency and power requirements.

Analysts expect Broadcom's adjusted earnings per share to grow at an annualized rate of 32% through fiscal 2029 (which ends in October). Given those high expectations, the stock is trading at 51 times this year's earnings estimate -- the highest multiple it has traded at over the last three years. Assuming the stock is trading at 40 times forward earnings in 2029, the share price would be $792 based on the consensus estimate. Investors can still double their money from Broadcom's current share price.

Image source: Getty Images.

2. Dell Technologies

Dell Technologies (NYSE: DELL) doesn't get a lot of attention, but that's why the stock could be undervalued. Dell is the No. 1 supplier of servers. Demand for its AI-optimized servers is red hot, positioning the stock to potentially double within the next five years, if not sooner.

Demand for servers is soaring. IDC estimates that spending on servers grew 73% in 2024. The market is expected to grow at a compound rate of 16% through 2029. All Dell would need to do is hold its market share lead to double its server business, and potentially double shareholders' investment.

The AI server market specifically is estimated to grow 55% in 2025, according to Bloomberg Intelligence. Dell's 19% year-over-year increase in total revenue last quarter was primarily driven by the strong demand in the AI server market.

Most of Dell's revenue (56%) comes from infrastructure solutions (servers), with the rest coming from client solutions (PCs and peripherals). Dell's PC business is basically an afterthought at this point, as its infrastructure revenue grew 44% year over year last quarter.

Dell said it shipped more AI solutions in the first half of the year than it did in all of last year. While the server market is competitive and generates low margins, Dell's competitive advantage is the extensive sales force it uses worldwide to sell to large customers, its ability to offer customized solutions for enterprises, and its speed to market.

With the server business booming, Dell doesn't need to see much growth from its PC business for investors to do well. This is a server growth story all the way. Analysts expect Dell's adjusted earnings per share to grow at an annualized rate of 13% to reach $14.94 by fiscal 2030 (which ends in January).

The stock currently trades at a conservative forward price-to-earnings multiple of 14. If it can earn a 20 forward earnings multiple in five years, the stock would trade at $300 a share, implying upside of 125% from the current $133 share price. Given the growing sentiment around the AI opportunity, the stock should earn a higher earnings multiple and fuel market-beating returns for Dell investors.

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John Ballard has no position in any of the stocks mentioned. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.