Broadcom, a key S&P 500 component, delivered strong gains in 2025 with its AI business accelerating. The company’s revenue backlog is solid, and recent AI deals are expected to drive further growth next year.

The S&P 500 index saw a 17% gain in 2025, reaching nearly 6,850. Forecasts suggest the index could hit 7,500 by next December, indicating a potential 10% increase. AI infrastructure spending is expected to be a key driver for the index, with Broadcom poised for further gains.

Broadcom’s AI chips are in high demand, with its AI accelerators integrating ASICs, HBM, and connectivity chips for enhanced performance. Recent contracts with tech giants and a deal with OpenAI could add billions in revenue for Broadcom, boosting its standing in the AI chip market.

Analysts anticipate Broadcom’s revenue growth to accelerate to 35% in the current fiscal year, reaching nearly $86 billion. The company’s AI business is expected to expand significantly, with a robust revenue pipeline worth $110 billion.

Despite Broadcom’s impressive stock performance, its forward earnings multiple suggests a potential bottom-line jump. The company’s PEG ratio of 0.60 indicates undervaluation, making it a compelling option for growth investors eyeing the AI sector.

Read more at Yahoo Finance: 1 Top Stock to Buy Before That Happens