The Broadcom Ink logo is displayed on a mobile phone in this photo illustration in Brussels, Belgium, on September 2, 2025. (Photo by Jonathan Raa/NurPhoto via Getty Images)
NurPhoto via Getty Images
Broadcom’s stock (NASDAQ: AVGO) is climbing, buoyed by impressive quarterly earnings and a new customer win for its custom AI chips. Adding to the optimism, the company expects revenue growth to speed up next year. It’s no surprise, then, that the stock has more than doubled in the past twelve months.
But what could fuel another 100% gain to levels past $600 from here? We’ll explore the key factors that could push the stock to new heights in the analysis that follows. That being said, if you seek an upside with less volatility than holding an individual stock, consider the High Quality Portfolio. It has comfortably outperformed its benchmark—a combination of the S&P 500, Russell, and S&P MidCap indexes—and has achieved returns exceeding 91% since its inception. Separately, see – What’s Happening With ISRG Stock?
Key Drivers That Could Propel Broadcom’s Future Growth:
Expanding Hyperscaler Customer Base for AI Chips
Broadcom’s growth is anchored by its custom AI chip partnerships with top hyperscalers, namely Google (for its TPU) and Meta. In a significant development on September 4, 2025, the company announced it has secured a fourth major, unnamed customer for its custom AI accelerators (XPUs), reportedly worth $10 billion. This diversifies its revenue and solidifies its role as a key enabler for large-scale AI infrastructure.
Dominance in the Shift to AI Inference
While the initial AI boom focused on training, the market is now shifting to inference, where Broadcom holds a strategic advantage. As AI applications are deployed at scale, the demand for high-performance, power-efficient inference chips and networking skyrockets. Broadcom’s expertise in specialized networking and processing is critical for these workloads, positioning it to capture this massive market segment.
Technological Leadership in Networking and Silicon
Broadcom maintains its competitive edge through relentless product innovation. It is now shipping its Tomahawk 6 and Tomahawk Ultra networking chips, which significantly outperform their predecessor and are essential for building out large AI clusters. Furthermore, its leadership in co-packaged silicon photonics is a key technology for next-generation data centers, enabling the faster, more efficient data transfer required for advanced AI. Notably, the Tomahawk Ultra can connect up to 1,024 accelerators in a single rack, significantly more than NVIDIA’s NVLink Switch, which only supports up to 72 GPUs.
Successful VMware Integration and Software Growth
Beyond hardware, the acquisition of VMware has transformed Broadcom into a major infrastructure software company. Broadcom is successfully transitioning VMware customers to subscription models and streamlining the portfolio. This strategy is already boosting recurring revenue and is expected to generate substantial, stable cash flow, significantly improving the company’s overall profit margins. For perspective, VMware, which is part of Broadcom’s infrastructure software segment, saw its revenue surge 43% y-o-y to $6.8 billion in Q3 fiscal 2025 (fiscal period ends in October).
The Path to a 2x Stock Price
For Broadcom’s stock to double in value, it relies on a powerful combination of substantial earnings growth and a sustained, premium valuation from investors. The pathway is built on two core pillars:
1. Revenue Growth Translating to Exponential Earnings
The foundation for growth is a strong top-line forecast. We project Broadcom’s revenue could grow from around $60 billion in the last twelve months to more than $105 billion by 2028, driven primarily by its AI and VMware segments.
However, the key is Broadcom’s exceptional profitability. With adjusted net income margins around 50%, revenue growth has a magnified impact on the bottom line. This means earnings are positioned to grow significantly faster than sales. For example, if revenue increases by 75% over the next few years, the company’s adjusted earnings per share (EPS) could nearly double from around $6.29 now to $12 in 2028.
2. Sustaining a Premium Valuation Multiple
Earnings growth alone isn’t enough; the stock must also maintain its high valuation multiple. Broadcom has been trading at a premium valuation of over 50 times trailing adjusted earnings for several reasons:
- High Switching Costs: Deep, multi-year commitments with customers provide revenue visibility and pricing power.
- Elite Financials: The company operates with best-in-class profitability and cash flow margins.
- Market Leadership: It holds a dominant position in high-growth markets like AI networking and custom silicon.
If investors continue to assign a premium multiple of around 50x to the stock, an EPS of $12 would support a stock price of around $600. Furthermore, the multiple could expand even further if Broadcom demonstrates sustained AI revenue growth above 40%, captures more market share, and secures new large-scale customers.
Key Risks to Consider
Despite the strong growth outlook, several risks could impact Broadcom’s performance and valuation.
Customer Concentration and AI Spending
Broadcom’s AI revenue is highly dependent on a small number of hyperscale customers. While profitable, this concentration creates a significant risk; a change in spending plans or a strategic shift from even one major customer could disproportionately impact Broadcom’s revenue. Any broader slowdown in the rapid pace of AI infrastructure investment would also directly threaten the company’s primary growth engine.
Competitive Pressure and Margin Erosion
The market for AI chips and networking solutions is intensely competitive. Broadcom faces pressure from established rivals like Marvell and NVIDIA, as well as the risk of its own hyperscale customers developing more of their in-house silicon solutions. This competition could compress the high profit margins that currently justify Broadcom’s premium valuation.
Macroeconomic and Market Sensitivity
Broadcom’s stock has historically shown higher volatility during broad market downturns compared to the S&P 500. It experienced steeper declines during both the COVID-19 correction and the 2022 inflation shock. This indicates a heightened sensitivity to macroeconomic uncertainty, and a future economic slowdown or market disruption could lead to a significant drop in its stock price.
The Verdict
Over the next few years, Broadcom’s stock could double to over $600. The path to this 2x return is straightforward: the company must achieve the forecasted revenue and earnings growth while convincing the market that its premium valuation is sustainable.
However, investors considering this opportunity should also weigh the risks. The stock has experienced drops of up to 50% in the past, and they must be prepared for similar volatility. Despite this, for those with an investment horizon of three years or more, Broadcom’s stock has a strong potential to double from its current level.
See, there always remains a meaningful risk when investing in a single, or just a handful of stocks. Consider the 30-stock Trefis High Quality (HQ) Portfolio, which has a track record of comfortably outperforming the S&P 500 over the last 4-year period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.
