From Yahoo Finance: 2025-06-13 04:19:00

Broadcom is emerging as a top supplier of custom data center chips and networking equipment for AI workloads. The company anticipates a $90 billion opportunity by 2027. Despite its expensive stock now, long-term investors may still see positive returns. Broadcom has a history of success in the semiconductor and electronics industries, with a focus on AI hardware for data centers.

Broadcom’s stock has tripled in the last two years due to its soaring AI revenue, propelling it to a $1 trillion market cap. The company’s AI opportunity could drive further upside. However, its stock is currently pricey by popular metrics. Since 2016, Broadcom has acquired CA Technologies, Symantec, and VMware, transforming its business for the AI revolution.

Broadcom’s AI hardware business is attracting attention, with plans to deploy millions of AI accelerators for hyperscale customers in 2027. The company’s networking equipment plays a vital role in the AI hardware stack. Revenue surged by 46% to $4.4 billion in the last quarter, with networking revenue up by 70% due to high demand for data center equipment.

Broadcom’s profitability is on the rise, with a 134% surge in net income and a 34% increase in adjusted EBITDA. The company’s AI revenue is a growth driver, showcasing potential for increased profitability. While the stock is expensive, long-term investors could benefit from Broadcom’s AI-driven revenue growth.

Broadcom’s stock may not be ideal for short-term investors due to its high valuation. However, long-term investors could see positive returns if spending on AI accelerators and networking equipment continues to rise. Management expects spending to reach $90 billion in 2027, making it essential for investors to hold the stock for at least three years for potential gains.

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