Why These Semiconductor Stocks Could Surge 50% in the Next 12 Months

The market loves growth, and two of the artificial intelligence (AI) infrastructure names with the biggest growth opportunities still ahead are Advanced Micro Devices (NASDAQ: AMD) and Broadcom (NASDAQ: AVGO). That's why both semiconductor stocks have the potential for 50% or more upside over the next year.

Right now, AI infrastructure spending is booming, with the five largest hyperscalers (owners of massive data centers) alone expected to spend $700 billion this year building out data center capacity. At the same time, there are clear shifts in the market set to benefit both AMD and Broadcom. That's why these are the two top stocks to own moving forward.

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AMD: An inference and agentic AI opportunity

Trading at a forward price-to-earnings (P/E) ratio of 63.5 times 2026 analyst estimates, AMD's stock does not appear cheap. However, the growth in front of it could be enormous, which could easily send its stock up more than 50% over the next year.

In the AI accelerator market, AMD is benefiting from the shift toward inference and hyperscalers looking to diversify their chip suppliers away from just using Nvidia. The company's chiplet design, which can package more memory, is particularly well-suited for inference, which is now starting to grow faster than the market for AI model training. AMD already has two large $100 billion deals in place for its graphics processing units (GPUs), and it's believed that Anthropic will also begin using its next-generation chips.

At the same time, the company has a huge opportunity in the data center central processing (CPU) market, where it has established itself as a strong leader. With agentic AI, the ratio of GPUs to CPUs is expected to go from 8:1 to 1:1, with Nvidia recently saying this is a $200 billion addressable market, which was significantly higher than the $120 billion market AMD projected just earlier in May. With demand starting to outstrip supply, prices are rising, which should also bolster CPU gross margins.

AMD generated $34.6 billion in revenue last year, with a 50% gross margin. Between its GPU and CPU opportunities, it is certainly not out of the realm for the company to be doing $175 billion in revenue ($100 billion in GPUs and $75 billion in CPUs) with 75% gross margin by 2030. Even with share dilution from AMD's GPU deals, the company could generate around $50 in earnings per share (EPS) in 2030. And that is why the company could have 50% more upside from here over the next 12 months.

Broadcom: A custom AI chip leader

Like AMD, Broadcom is also riding the trends of inference and companies looking for cheaper alternatives to Nvidia. One way hyperscalers are looking to reduce costs is by turning to custom AI application-specific integrated circuits (ASICs). Because these are hardwired chips designed for specific purposes, they not only cost less but also tend to be more energy-efficient.

As a leader in ASIC technology, Broadcom helped Alphabet develop its highly regarded Tensor Processing Units (TPUs), which have become a big growth driver for the company. Alphabet is spending massively on AI infrastructure and its own chips, and has also started letting select customers, including Anthropic, place TPU orders directly with Broadcom. Other hyperscalers have also turned to Broadcom to help them develop their own custom ASICs.

Broadcom has said it has a clear path to over $100 billion in custom chip revenue in fiscal 2027 alone. Citigroup analysts, meanwhile, recently projected the company would hit $180 billion in AI sales in 2028. Broadcom's custom chip business also feeds into the company's powerful networking portfolio, which is becoming more important as chip clusters grow in size.

Broadcom generated $20 billion in total AI revenue in fiscal 2025, $27 billion in software revenue, and nearly $17 billion in non-AI semiconductor revenue. Based on Citi's $180 billion in AI revenue estimates, that could take its total revenue to about $230 billion and bring adjusted earnings per share to well over $26 in fiscal 2028 (keeping chip and software margins steady). That gives the stock 50% upside from here over the next year.

Citigroup is an advertising partner of Motley Fool Money. Geoffrey Seiler has positions in Advanced Micro Devices, Alphabet, and Broadcom. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Broadcom, and Nvidia. The Motley Fool has a disclosure policy.