The chart above shows that Broadcom’s revenue estimates have been significantly increased for all three fiscal years, thanks to the rising demand for its artificial intelligence (AI) chips. These chips are being utilized in data centers for AI model training, inference, and to enhance server connectivity for handling AI workloads. In fiscal 2024, Broadcom’s AI revenue surged by an impressive 220% to $12.2 billion, with a projected 65% year-over-year revenue growth in the current quarter to $3.8 billion from AI chip sales. Additional hyperscale customers opting for Broadcom’s custom AI processors will further boost its market position and revenue potential.
During the latest earnings call, Broadcom’s management highlighted the significant market opportunity for its custom AI accelerators and networking chips, estimating a serviceable addressable market of $60 billion to $90 billion by fiscal 2027. With Broadcom aiming to maintain a substantial share of this market, its AI revenue could reach $37.5 billion to over $50 billion by 2027, showing promising growth potential.
Despite these positive projections, investors may find Broadcom’s stock appealing due to its comparatively low forward earnings multiple of 35 times and a favorable price/earnings-to-growth ratio of 0.63, indicating that it is attractively priced in relation to its expected earnings growth over the next five years. Considering these factors, investors seeking a promising AI investment with strong potential returns over the next few years may find Broadcom a compelling choice to add to their portfolios.
As mentioned earlier in the article, The Motley Fool Stock Advisor analyst team has identified Broadcom as one of the top 10 stocks for investors to consider buying now, further highlighting its investment potential.
“Unfortunately, com didn’t make the list of top stocks. However, the 10 selected stocks have the potential to generate exceptional returns in the years ahead. For example, consider Nvidia, which was included in the list on April 15, 2005. If you had invested $1,000 at the time of the recommendation, your investment would have grown to $859,342!
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For further details on the 10 selected stocks, please refer to the latest information available as of December 23, 2024. JPMorgan Chase is acknowledged as an advertising partner of Motley Fool Money. Harsh Chauhan does not hold any positions in the mentioned stocks. The Motley Fool has positions in and recommends JPMorgan Chase and Nvidia, while also endorsing Broadcom. A comprehensive disclosure policy is maintained by The Motley Fool.”
