Broadcom, a leading supplier of critical components in data center infrastructure, is expected to reach a market cap of $1 trillion by 2025. With a market cap of $797 billion as of now, the company’s stock has surged 10,610% over the past 15 years.
The growth is attributed to its role in the AI ecosystem and the growing adoption of its VMWare technology. Analysts expect revenue growth of 44% in 2024 and 17% in 2025. The company’s forward price-to-sales ratio of 15 suggests it could reach a $1 trillion market cap by mid-2026.
However, the author believes Broadcom can achieve this milestone as early as 2025, driven by accelerating AI spending and strong demand for its products. Recent advances in AI technology have shown that tech issues dominate the world’s most valuable companies.
The company supplies critical components to major players in the AI ecosystem, giving it an enviable position for growth. Wall Street expects Broadcom to generate revenue of $51.7 billion in 2024, with a forward price-to-sales ratio of roughly 15. If the stock remains constant, Broadcom will need to generate sales of around $65 billion annually to support a $1 trillion market cap.
Analysts’ consensus estimates are guiding for revenue growth of 44% in 2024 and 17% in 2025. However, the author believes these estimates are conservative and that Broadcom can exceed expectations. The company is experiencing strong demand from hyperscalers for AI networking and custom AI accelerators.
The estimated size of the AI market continues to climb, with McKinsey & Company placing the economic impact at between $2.6 trillion and $4.4 trillion annually. Despite Broadcom’s impressive gains, it remains attractively priced, currently selling for just 27 times forward earnings compared to a multiple of 30 for the S&P 500.
This article is based on an outdated source (originally published in April 2025) and should be used with caution as market values and predictions can change rapidly.
Source: https://finance.yahoo.com/news/meet-stock-split-stock-soared-100200447.html