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In 2016, the Singapore-based chipmaker Avago acquired the U.S. chipmaker Broadcom ( AVGO +0.39% ) for $37 billion, inheriting its brand. Over the following decade, it relocated its headquarters to the U.S., expanded its infrastructure software business with several major acquisitions, and launched more custom AI chips for hyperscalers. From fiscal 2016 to fiscal 2025 (which ended last November), Broadcom's revenue grew at a 19% CAGR.
Over the past ten years, its stock delivered a total return of 2,580% with reinvested dividends, outperforming the S&P 500 's ( ^GSPC +0.59% ) total return of 327%. Let's see what a $5,000 investment in Broadcom might be worth by 2032. Image source: Getty Images.
What are Broadcom's biggest catalysts? In fiscal 2025, Broadcom generated 58% of its revenue from its semiconductor solutions segment and the remaining 42% from its infrastructure software segment. Here's how those two businesses fared over the past two and a half years.
Growth (YOY) FY 2024 FY 2025 Q1 2026 Q2 2026 Semiconductor Solutions Revenue 7% 22% 52% 79% Infrastructure Software Revenue 181% 26% 1% 9% Total Revenue 44% 24% 29% 48% Data source: Broadcom. YOY = Year-over-year. Broadcom's semiconductor business sells a wide range of chips for the mobile device, data center, networking, wireless, storage, and industrial chip markets.
But over the past two years, it ramped up its production of custom application-specific integrated circuits (ASICs) for processing AI tasks . When deployed at scale, these custom AI accelerators (XPUs) can process AI inference tasks more cost-efficiently than stand-alone GPUs. As the AI market expanded, Alphabet 's Google, Meta Platforms , OpenAI, Anthropic, and other AI software giants bought more of Broadcom's custom ASICs to curb their dependence on Nvidia 's ( NVDA -0.52% ) GPUs.
That's why its AI chip sales soared 65% to $20 billion, or 31% of its top line, in fiscal 2025. It expects that figure to surge to $115 billion by fiscal 2027. That would represent two-thirds of its projected revenue and easily offset its slower sales of non-AI chips and infrastructure software.
Broadcom also sells high-speed Ethernet switch ASICs and optical interconnect components, which are essential for supporting AI clusters at data centers. Therefore, its soaring sales of custom AI chips will boost its sales of other AI infrastructure products. Premium Feature Moneyball Superscore 91 /100 Today's Change ( 0.39 %) $ 1.40 Current Price $ 361.54 However, Broadcom's infrastructure software business -- which includes CA's enterprise software, VMware's cloud platform , and Symantec's former enterprise security division -- gives it even more ways to lock in its semiconductor customers with bundled services.
Its stable growth should also insulate it from a cyclical slowdown in semiconductor sales. Where will Broadcom's stock be in 2032? Broadcom's business could transform as sales of its custom AI chips soar.
From fiscal 2025 to fiscal 2028, analysts expect its revenue and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to grow at CAGRs of 62% and 63%, respectively. Those are stellar growth rates for a stock that trades at 14 times next year's adjusted EBITDA. According to Market Research Future, the global AI market could expand at a 38.5% CAGR from 2026 to 2035, while the global AI chip market could grow at a 33.7% CAGR from 2025 to 2035.
If Broadcom keeps up with those secular trends, its stock could soar even higher. If Broadcom matches Wall Street's expectations through fiscal 2028, grows its adjusted EBITDA at a 30% CAGR through fiscal 2033, and trades at a more generous 25 times its forward adjusted EBITDA, its stock could rise nearly tenfold by 2032 and turn a $5,000 investment into over $50,000. That rally would propel Broadcom's market cap to over $17 trillion.
By comparison, Nvidia -- the world's most valuable company -- is currently worth $5.6 trillion. That would certainly be a best-case scenario for Broadcom, but its stock could still easily double or triple in value even if its growth cools off over the next six years.
Source: The Motley Fool
