The $4 trillion market cap club is a fairly exclusive membership body. There are only four members, and Alphabet (GOOG +0.46%) (GOOGL +0.82%) is one of them. However, over the next few years, I think more companies will join Alphabet, including Taiwan Semiconductor Manufacturing (TSM +0.31%) (TSMC) and Broadcom (AVGO +0.43%). These two hardware providers have a ton of growth ahead of them, and both of them can about double to gain entry into the club.
Finding stocks that can double in just a few years isn't easy, but I think these two are primed to do it.
Image source: Getty Images.
TSMC and Broadcom have a massive growth catalyst in front of them
To reach the $4 trillion club, both of these companies must have some major business growth ahead, which they do. Both are major beneficiaries of AI spending, and with AI spending projected to continue rising over the next few years, these two are in great shape.
TSMC is probably the easiest winner to pick in this sector, as its logic chip fabrication processes are utilized by nearly every company in the AI computing industry, including Broadcom. TSMC will benefit as long as there is increased chip demand, which has proven true so far. During TSMC's latest earnings call, CEO C.C. Wei noted that chip demand looks strong through at least 2029 to 2030, leaving multiple years of incredible growth ahead.
NYSE: TSM
Key Data Points
Additionally, management announced another $100 billion investment in its Arizona facilities, showcasing that there is still more production capacity necessary to meet demand.
Broadcom is also feeling huge demand increases, and its custom AI chip business is about to take off. Instead of offering a broad-purpose computing unit like a GPU, Broadcom is partnering with AI hyperscalers, including Alphabet, to design and produce custom AI chips. These purpose-built chips can outperform GPUs in certain applications, and make it an easy way to stretch capital expenditure dollars further by obtaining more compute at a lower cost.
NASDAQ: AVGO
Key Data Points
Broadcom CEO Hock Tan has told investors that its AI semiconductor business will generate more than $100 billion during 2027, a major increase from today's levels.
But will that be enough to get Broadcom into the $4 trillion market-cap club?
These two have a ways to go to get there
TSMC is a $2.2 trillion business, and Broadcom is a $2 trillion company, so both have work to do to reach a $4 trillion valuation. But I think it's possible. For a long-term price-to-earnings ratio, I think 30 is probably reasonable, considering their above-average growth, strong execution, and market position. That's exactly where TSMC trades at now, so this also jibes with current market conditions.
Wall Street analysts project $24.46 in earnings per share (EPS) for TSMC in 2028. At a P/E ratio of 30, that prices the stock at $733 per share, indicating 71% upside from today's levels. It would also price TSMC stock at a market cap of $3.74 trillion, just short of the $4 trillion target. However, Wall Street analysts have consistently underprojected TSMC's growth rate, and that wouldn't surprise me here. As a result, I think TSMC can get across that threshold with a bit of outperformance, which it's well accustomed to delivering.
Broadcom is in a similar boat, and Wall Street expects $21.28 for 2028 earnings. At a P/E of 30, that prices the stock at $638, up 52% from today's levels. However, I think Wall Street is way underestimating the impact of having several AI hyperscalers adopt Broadcom's custom AI infrastructure, which could lead to several years of strong growth. Furthermore, there are only two long-term estimates for 2028, so some bearish analysts could be driving this sentiment.
The growth is there for both of these two companies to capture, and I think it will get them both across the $4 trillion threshold by 2028, although it will be a close call. By 2029, each of them should be across the $4 trillion mark, which is still a strong performance in just a handful of years.
