Meet the Growth Stock That Isn't Even in the "Magnificent Seven," but Just Joined the $2 Trillion Club and Hit an All-Time High

Bank of America analyst Michael Hartnett popularized the phrase "Magnificent Seven" in 2023 to describe seven tech-focused companies driving broader market returns. The list includes Nvidia, Apple, Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL), Microsoft, Amazon, Meta Platforms, and Tesla.

These companies are undeniably influential -- accounting for over a third of the S&P 500's market cap. But the list has a glaring flaw -- it doesn't include Broadcom (NASDAQ: AVGO).

Broadcom reached an all-time high on April 22, surpassing $2 trillion in market cap. That makes Broadcom the sixth-most-valuable U.S. company -- ahead of Meta and Tesla, and behind Nvidia, Apple, Alphabet, Microsoft, and Amazon.

Broadcom has produced a total return of 143.9% over the past year, outperforming every Magnificent Seven stock. Here's why Broadcom continues to soar with no signs of slowing down, and why it remains a generational buying opportunity for long-term investors.

Image source: Getty Images.

Broadcom's networking deal with Google Cloud

Broadcom popped 5.1% on April 22 in response to broader market gains and a press release announcing an expanded collaboration with Alphabet's Google Cloud for its Cloud Network Insights service. Cloud Network Insights will be an exclusive feature for Google Cloud customers.

The service will be enabled by AppNeta, a network monitoring tool from Broadcom, for software-as-a-service (SaaS), cloud, and critical applications. It provides active and passive monitoring for pinpointing problems across SaaS and cloud application traffic. Broadcom argues that traditional monitoring tools are no longer sufficient to handle complex networks -- especially when they span on-premises, multiple clouds, third-party networks, and SaaS environments.

Custom AI chips for major hyperscalers

On the same day as the Cloud Network Insights announcement, Google's senior VP and chief technologist for AI and infrastructure, Amin Vahdat, released a blog post discussing new Tensor Processing Units (TPUs) -- the TPU 8t for AI training and the TPU 8i for inference. TPUs are designed by Google in partnership with Broadcom.

TPU 8t reduces development time for frontier models by enabling faster compute and storage access, whereas TPU 8i provides more memory for latency-sensitive workloads between AI models and agents.

The April 22 news follows an April 6 announcement by Anthropic, the maker of Claude large language models, to expand its partnership with Google and Broadcom. Anthropic will develop multiple gigawatts of TPU capacity, with the first coming online in 2027.

The commitment is a big stamp of approval from a leading AI company that TPUs, and in turn Broadcom's tech, are leading computing infrastructure. However, Anthropic is not exclusively using TPUs -- it also trains Claude on Amazon Web Services (AWS) Trainium and Nvidia GPUs.

Broadcom's master plan is working

The latest news with Google validates Broadcom's comments on its first quarter fiscal 2026 (ending in late October 2026) earnings call. On the March 4 call, Broadcom discussed its booming networking business, which accounted for around a third of AI revenue and is forecast to make up 40% of the upcoming second quarter fiscal 2026 revenue. So while a lot of focus is on Broadcom's custom AI chips, like TPUs for Google, it's really AI chips paired with networking that make it such a unique AI powerhouse.

On the March 4 earnings call, Broadcom also discussed the limitations of general-purpose GPUs and the need for separate, customized AI chips for AI training and AI inference. Google's decision to make two chips for its eighth-generation TPUs is Broadcom's strategy coming to fruition in real time. And perhaps most importantly, it gives Broadcom's management credibility by showing they aren't just hyping their solution to win investor approval.

That credibility is especially important given Broadcom CEO Hock Tan's bold claim for $100 billion in fiscal 2027 revenue from AI chips alone. If that prediction comes true, it would transform Broadcom into a major AI business rather than a balance between AI chips, networking, and non-AI semiconductor and infrastructure software.

Broadcom can back up its expensive valuation

The latest development with Google underscores why Broadcom has become a major player in both AI chips and AI networking. Broadcom's skyrocketing AI business is accelerating its earnings growth and boosting its margins.

Analyst consensus estimates have Broadcom booking $104.36 billion in fiscal 2026 revenue and $11.43 in earnings per share (EPS), followed by 51.8% revenue growth and 58.5% earnings growth in fiscal 2027 (ending in late October 2027), for an analyst consensus of $158.47 billion in revenue and $18.12 in EPS.

At $422.65 per share at the time of this writing, Broadcom isn't cheap by any means -- it's trading at 23.3 times fiscal 2027 EPS estimates. If Broadcom comes up short, it could look way overvalued and be ripe for a sell-off. But if Broadcom continues to build on its momentum by becoming a core player in hyperscale AI infrastructure, the stock could continue to deliver outsize returns for long-term investors.

All told, Broadcom's rapid run-up is completely justified, and the growth stock remains a top buy for risk-tolerant investors.

Bank of America is an advertising partner of Motley Fool Money. Daniel Foelber has positions in Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Broadcom, Meta Platforms, Microsoft, Nvidia, and Tesla. The Motley Fool has a disclosure policy.