Broadcom (AVGO 3.84%) is a stock that may get overlooked by small investors. Since its clients are primarily other businesses, it does not have the direct connection with consumers that has benefited brands like Apple or Amazon.

Nonetheless, its success has taken its market capitalization to nearly $570 billion, and the stock continues to rise after having doubled in 2023. Does that massive size mean it can't double again in 2024?

The state of Broadcom

Broadcom began as Avago Technologies. As a business-to-business chip designer, it spends heavily on research and development, employing engineers near its largest clients to design semiconductors that meet those clients' needs. This has helped it with innovations such as Apple's Wi-Fi hotspot chip and numerous other semiconductors.

The semiconductor company has also grown in large part through acquisitions. It adopted the Broadcom name in 2016 after purchasing a company by that name. Such purchases also brought it into the enterprise software business.

The move into software began with the purchase of CA Technologies in 2018 and the purchase of Symantec's enterprise security business the next year. But its largest software-related purchase happened recently when it acquired VMWare. As a result, enterprise software now accounts for over 40% of Broadcom's revenue, which helps insulate it from the cyclicality of the semiconductor industry.

Broadcom's path to further growth

At first glance, the company's financials may not suggest that another doubling is in the cards. In its fiscal 2023 (which ended Oct. 29), Broadcom reported $36 billion in revenue. That was up 8%, a respectable but not outsized growth rate.

However, the company kept a lid on its cost of revenue and operating expense growth. That resulted in its net income rising 26% to $14 billion.

Moreover, the company's predictions point to a notable recovery, likely driven by the VMWare purchase and a recovery in the semiconductor industry. Broadcom forecasts that in its fiscal 2024, revenue will rise 40% to $50 billion. That could translate into a considerable increase in its profits.

Additionally, a recently announced dividend hike took its payout to $21 per year. Its 1.7% dividend yield is marginally higher than the 1.4% average of the S&P 500, but the 14% increase from last year's level should significantly boost returns for its longer-term investors.

The valuation offers a more mixed picture of Broadcom's prospects for doubling its market cap again. Its P/E ratio of 37 is significantly higher than its 22 earnings multiple from one year ago. Still, that P/E ratio is far from a record. Indeed, it's close to the company's historical average, a factor that could bode well for new investors.

Will Broadcom double in 2024?

Given the state of the stock, another double is possible but far from guaranteed. Indeed, a recovery in the chip sector and the added benefits from the VMWare acquisition give Broadcom significant potential to earn much higher profits. And if market sentiment improves, further multiple expansion is certainly possible.

Still, the stock has risen by nearly 10% since the beginning of the year, giving it considerable potential to outpace the S&P 500. Hence, even if it does not rise by 100% or more this year, Broadcom will likely continue to serve its shareholders well.