Nvidia (NVDA -0.50%) and Broadcom (AVGO +0.70%) are two of the most promising stocks in the entire market. Both companies have strong relationships with the AI hyperscalers, and the computing units they design are being deployed in mass quantities. They each have told investors they expect huge sales growth ahead, yet the market hasn't fully priced that growth into their shares. As a result, I could see an investment split between these two tripling by 2028.
That's a huge expectation, but when you examine the language each company has used, it makes perfect sense.
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How are these two involved in AI?
Nvidia and Broadcom approach AI computing in two completely different ways. Nvidia makes GPUs, alongside other hardware and software to support them. GPUs are parallel processors that handle many types of complicated computations by slicing them up into thousands of smaller problems, then solving those simultaneously. These accelerated computing units are well suited to the complex computing workloads of AI, but they are also highly flexible, capable of being programmed for a variety of tasks and data sets.
NASDAQ: NVDA
Key Data Points
However, sometimes a more specialized computing unit is a better tool for the job. That's where Broadcom's custom AI chips come in. Broadcom is partnering directly with several AI hyperscalers and AI labs to design application-specific integrated circuits (ASICs) for them. These chips are designed around the well-defined types of workloads that they're expected to see, so there are no wasted capabilities. That saves money up front, so these computing units can outperform GPUs at a lower price point when the workload and computing unit are matched to each other, and their popularity with data center operators is skyrocketing.
The future of AI computing is a combination of both types of computing units, which makes both companies great investments. But is expecting their share prices to triple in just over two years really reasonable?
Nvidia and Broadcom each expect huge growth
Broadcom CEO Hock Tan has given long-term guidance for investors. Next year, he expects the company's AI semiconductor revenue to rise to $115 billion. For reference, AI semiconductor revenue was $16.7 billion during Q3. Broadcom expects AI semiconductor revenue to double again to $230 billion in 2028. What's even more important is that it has secured the supply chain to deliver these chips, giving the company high visibility into its future revenues.
NASDAQ: AVGO
Key Data Points
Wall Street analysts expect Broadcom to book $174 billion in revenue in 2027, including about $59 billion in non-AI semiconductor revenue. If we assume that part of the business grows by 10% to $65 billion, combined with the $230 billion in expected AI revenue, that indicates total revenue of $295 billion. If Broadcom can deliver a 50% profit margin, and if the market values it at 35 times trailing earnings, it would achieve a market cap of $5.16 trillion, about triple today's $1.7 trillion level.
Nvidia expects strong growth too, though not as rapid as Broadcom's. For its next fiscal year, management expects 70% revenue growth. While it hasn't given guidance for what to expect in 2028, I'd imagine it's a similar figure. Plus, Nvidia has a tendency to offer conservative guidance and then overdeliver, so I don't think 70% annual growth for the next two years is out of the question. If Nvidia hits analysts' projections for 2026 and grows at 70% over the next two years, that would indicate revenue of $1.2 trillion. At a 55% profit margin and 35 times earnings, the company would be valued at over $20 trillion, almost quadruple today's market cap.
All of these calculations are based on the growth rates the companies are telling us to expect, and applying profit margins and valuations that have been common for them in recent history. These massive growth rates are right in front of investors; you just have to act now to take advantage of them.
