Currently, five publicly traded companies have achieved market values of at least $2 trillion. Included on that elite list are Nvidia, Apple, Alphabet, Microsoft, and Amazon. But certain Wall Street analysts think Broadcom (AVGO +1.87%) and Meta Platforms (META +3.82%) will join the list during the next year, as detailed below:
- Blayne Curtis at Jefferies has assigned Broadcom a target price of $480 per share. That implies 29% upside from the current share price of $373. It also implied a market value of nearly $2.3 trillion.
- Scott Devitt at Wedbush has assigned Meta Platforms a target price of $920 per share. That implies 47% upside from its current share price of $627. It also implies a market value of $2.3 trillion.
Like other members of the $2 trillion club, Broadcom and Meta are well positioned to benefit from artificial intelligence (AI). Here's what investors should know.
Image source: Getty Images.
Broadcom: 29% implied upside
Broadcom develops a broad range of infrastructure software and semiconductor solutions. The company leads the market in high-speed Ethernet switching and routing chips, which are networking components needed to support artificial intelligence (AI) workloads in data centers. Broadcom also enjoys a dominant position in application-specific integrated circuits (ASICs) designed to accelerate AI workloads.
ASICs are custom chips built for specific tasks. Broadcom currently designs custom AI accelerators for four major customers (with more potential customers in the pipeline). The current list includes Alphabet's Google, Meta Platforms, TikTok-parent ByteDance, and OpenAI, according to JPMorgan Chase. That bodes well for Broadcom. Grand View Research expects AI accelerator sales to grow at 29% annually through 2033.
Broadcom reported encouraging third-quarter financial results, beating estimates on the top and bottom lines. Revenue increased 22% to $16 billion, due to especially strong sales growth in custom AI and networking chips, as well as its virtualization software VMware. Non-GAAP (generally accepted accounting principles) earnings per share increased 36% to $1.69 per diluted share.
Wall Street estimates Broadcom's adjusted earnings will increase at 31% annually through 2028. That makes the current valuation of 60 times earnings look relatively reasonable. The price is certainly not cheap, but I think the stock is worth buying. Investors should start with a small position.
NASDAQ: META
Key Data Points
Meta Platforms: 47% implied upside
Meta Platforms is the second-largest adtech company in the world due to its unmatched portfolio of social media properties, which generate valuable consumer insights that inform ad campaigns. The company has invested aggressively in artificial intelligence -- from custom AI accelerators to proprietary large language models -- to strengthen its core advertising business.
While the market is hyperfocused on the amount of money Meta has spent on building that infrastructure, the investments have undoubtedly paid off. User engagement has improved across Facebook, Instagram, and Threads, and conversion have rates have also increased, meaning users are clicking more ads. CEO Mark Zuckerberg said, "Our AI recommendation systems are delivering higher quality and more relevant content."
That led to solid third-quarter financial results. Revenue increased 26% to $51 billion, and GAAP net income (excluding a one-time tax charge) increased 20% to $7.25 per diluted share. Nevertheless, the stock dropped sharply following the report, when Meta announced plans to invest even more aggressively in AI infrastructure in 2026.
Wall Street estimates Meta Platforms' earnings will increase at 16% annually over the next three years. That makes the current valuation of 28 times earnings look quite reasonable.
I think the recent pullback presents an attractive buying opportunity for long-term investors. Scott Devitt at Wedbush agrees. He recently added Meta to his list of best ideas, citing "the disconnect between fundamentals and investor sentiment." Now is a good time to buy a small position.
