Broadcom Soars as AI Spending Hits Stratospheric Heights

Broadcom's latest quarterly report indicates the company is poised for significant growth in the coming years.

The AI infrastructure spending has been growing at an incredible pace, and major hyperscalers, AI companies, and neocloud specialists are expected to continue investing more money in this space. In fact, Nvidia estimates that overall AI capex could jump to $3 trillion to $4 trillion by 2030.

Broadcom's underperformance means savvy investors can now buy the stock at a very attractive valuation, which could be a smart move given its terrific prospects. The company's stellar results and guidance don't justify the stock's underperformance, and Broadcom makes application-specific integrated circuits (ASICs) and networking components that are in high demand in AI data centers.

Broadcom released fiscal 2026 third-quarter results, with revenue jumping 86% year over year to $29.6 billion. The company noted that its AI chip revenue jumped by a whopping 221% year over year in fiscal Q3 to $16.7 billion and anticipates a stronger year-over-year increase of 236% this quarter to $21.7 billion.

The stock's cheap valuation and solid earnings growth potential point to significant long-term gains. Broadcom estimates that its AI revenue will reach $57.6 billion this year, up by 186% from last year, and double in fiscal 2027 to $115 billion. Assuming Broadcom achieves EPS of at least $30.00 in fiscal 2028, a discount to the tech-focused Nasdaq-100 index's earnings multiple of 34, its stock price could reach $900 in just over two years.