Did you know that in just the past five years, Broadcom (NASDAQ: AVGO) stock has soared by more than 630%? The tech company has been a hot buy, and it has routinely outperformed the market. Demand for custom chips has been through the roof as companies invest in artificial intelligence (AI) and build next-gen models, and Broadcom has benefited from that.
The company recently posted strong quarterly results yet again and highlighted just how massive its growth opportunities still are. Here’s a look at why Broadcom stock may have plenty of upside in the long run.
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Last week, Broadcom reported its first-quarter fiscal 2026 earnings. The results were strong, with the company’s revenue totaling $19.3 billion for the period ending Feb. 1, which was an increase of 29% from the same period a year ago. Its net income of $7.3 billion rose at an even faster rate of 34%.
But what really stood out was the company’s projections for its AI chip business. CEO Hock Tan says the company’s AI chip revenue will exceed $100 billion in 2027. This is impressive given that the tech company forecasts its AI semiconductor revenue to come in around just $10.7 billion for the second quarter. If its chip business will be north of $100 billion next year, that suggests a significant acceleration, as its quarterly revenue would need to average around $25 billion for that to happen. In Q1, its AI revenue more than doubled, rising by 106% to $8.4 billion.
Broadcom’s stock looks expensive, trading at around 70 times its trailing earnings. However, if your focus is on the long term, then this can arguably still be a good buy today. The tech company’s price-to-earnings growth ratio, or PEG, is just 0.75, which indicates good value for investors given the growth that analysts expect from the business over the next five years. Anything below 1.0 is a good PEG ratio, and Broadcom’s stock is well below that.
This year, the stock has been down, but that’s likely due to market conditions and widespread concerns in the tech sector about overspending on AI, rather than Broadcom’s overall performance. If you’re looking for a top stock to own with a lot of growth opportunities in AI, Broadcom stock can still be a solid investment to put in your portfolio today. With a market cap of around $1.6 trillion, it’s one of the leaders in tech, and that’s not likely to change anytime soon, given the company’s impressive growth prospects.
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David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.
Why Broadcom Isn’t Running Out of Growth Opportunities Anytime Soon was originally published by The Motley Fool
















