Broadcom (AVGO 1.63%) has been one of the undeniable winners of the artificial intelligence (AI) revolution, gaining nearly 500% since early 2023. In late 2024, I predicted that Broadcom would soar over the coming year, joining the $1 trillion club in 2025. Much to my surprise, the surge came much sooner than expected, with Broadcom stock gaining 39% in the weeks that followed, surpassing the trillion-dollar benchmark in December 2024.
Since then, the company has continued to outperform the broader market, gaining 63% over the past year, compared to 16% gains for the S&P 500. Broadcom currently sports a market cap of $1.56 trillion as of this writing, as demand for Broadcom's data center and AI solutions remains strong.
After the stock's breakout performance over the past year, here's what I expect from Broadcom in 2026.
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Strong secular tailwinds
One of the byproducts of the ongoing AI boom is the accelerating expansion of data centers, where most AI processing happens. While Broadcom's claim to fame is its semiconductors, the company has long been a key supplier of networking components and accessories that are staples in data center operations, as well as products in the cable, broadband, and mobile sectors.
Broadcom boasts that "99% of all internet traffic crosses through some type of Broadcom technology." As a result, the company is well-positioned to profit by supplying critical components for the data center buildout, which supports the growing demand for AI.
The cornerstone of Broadcom's recent growth is the company's Application-Specific Integrated Circuits (ASICs). These specialized semiconductors can be customized for specific use cases, making them more energy efficient and, therefore, more cost-effective.
In October, Broadcom announced a strategic collaboration with ChatGPT parent OpenAI to supply 10 gigawatts of ASICs over the next four years. The chips supplied as part of the multi-billion-dollar deal are expected to accelerate AI processing while reducing energy consumption. This is one of several recent deals that have established Broadcom's ASICs as a practical alternative to Nvidia's graphics processing units (GPUs), which dominate the data center market.
Keen insight into future demand
While investor predictions and Wall Street prognostications are all well and good, a company's management team is best positioned to understand the current business trajectory and forecast future demand. A look at Broadcom's recent results and what company executives have to say about the future can be instructive.
Broadcom reported record revenue in Q4, which rose 28% year over year to $18 billion, driving earnings per share (EPS) growth of 93% to $1.74. Perhaps more importantly, Broadcom reported that its backlog had climbed to $162 billion, with at least $73 billion expected to be earned over the next six quarters. This provides a baseline for the company's revenue over the coming 18 months.
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Key Data Points
Management has previously stated that Broadcom's AI opportunity will climb to between $60 billion and $90 billion by 2027 for its three existing hyperscale customers, but it's clear the company is attracting new clients.
For the first quarter, Broadcom's forecast calls for revenue of $19.1 billion, representing 28% growth. The company is also guiding for AI semiconductor revenue to double to $8.2 billion. Given Broadcom's growing backlog and track record of surpassing its own guidance, those figures are likely conservative.
2026 prediction
Predicting a stock price is more art than science. A multitude of factors, including the company's operating and financial results, the broader economy, and even investor sentiment, can weigh on share prices.
According to Wall Street estimates, Broadcom will generate revenue of $96.8 billion and adjusted EPS of $10.29 in 2026, representing growth of 52% and 51%, respectively. The stock is trading for 32 times forward earnings, which is reasonable for a big tech company generating double-digit sales and profit growth.
If Broadcom can deliver on analysts' expectations of 50%+ growth in 2026, the stock price could rise by a similar amount. However, I wouldn't be surprised to see some bumps in the road and a bit of multiple contraction, as investors have expressed concerns about lofty valuations.
Given its reasonable valuation and robust growth, I predict that Broadcom's stock price will rise 36% to $450 per share, pushing its market cap to $2.13 trillion by the end of 2026.
