Projected Value: The Valuation of AI Shares is Anticipated to Reach a Staggering $2 Trillion Within the Next Three Years
Broadcom, a leading semiconductor company with a current market cap of $1.2 trillion, is poised for significant growth, aiming to reach a staggering $2 trillion valuation within the next three years. This ambitious goal is largely driven by Broadcom's rapid revenue growth in AI-related products.
The company's AI-related revenues surged 46% year-over-year to $4.4 billion in Q2 2025, and are projected to reach $12.2 billion for the full year. This growth is expected to extend into 2026, propelled by the increasing demand for AI chips.
Broadcom's AI offerings are split into two categories: connectivity switches and custom AI accelerators, known as XPUs. Connectivity switches play a crucial role in stitching together the multi-piece answers in AI processing within data centers. On the other hand, XPUs are tailored to optimize processing for specific workloads in collaboration with the end user, providing an alternative to graphics processing units (GPUs) in certain applications.
Broadcom's XPUs could potentially outperform GPUs in specific use cases, as they are designed for the AI hyperscalers' workloads. This could help the company cut Nvidia out of the picture for some AI processing needs.
The company's AI-related revenue guidance for FY 2027 tracks perfectly with this growth. If Broadcom's base business doesn't grow, its total revenue could reach around $100 billion annually by FY 2027. AI-related revenue is projected to rapidly increase, reaching $60 billion to $90 billion by FY 2027, accounting for a significant portion of Broadcom's total revenue.
The absolute low side of the projection indicates a margin of safety in the revenue growth prediction. The continued expansion of Broadcom's Infrastructure Software segment, including revenue from VMware’s AI enterprise cloud offerings, is another factor contributing to this growth.
Analysts forecast total company revenue growth around 20-22% annually, with expected revenues rising to about $62.7 billion in 2025 and potentially $75 billion by early 2027. Earnings per share (EPS) are projected to rise from approximately $6.62 in FY 2025 to $8-$10 by 2026, supported by improving margins and a $10 billion stock buyback program.
CEO Hock Tan projects Broadcom could capture up to 70% of a $60 billion to $90 billion AI chip market by 2027, implying $42 billion to $63 billion in annual AI-related sales. This fundamental shift toward higher-margin, high-growth custom chips could vault Broadcom into the $2 trillion valuation level.
However, the company still faces risks including market volatility, competitive pressures in AI chip and AI infrastructure markets, and regulatory challenges. Achieving a $2 trillion valuation implies the stock price increasing roughly 55% from mid-2025 levels, achievable if earnings growth and valuation multiples align with current trends.
In summary, Broadcom's AI-related revenue growth is a critical catalyst boosting its valuation potential to reach $2 trillion within three years, driven by explosive AI chip demand, strong revenue and EPS growth, strategic acquisitions, and a growing software footprint in AI infrastructure.
- Recognizing the surge in AI-related revenues and the potential for XPUs to outperform GPUs in certain use cases, Broadcom is investigating new opportunities in the finance sector, aiming to invest in the stock-market to further boost its financial growth.
- With the continuous expansion of its Infrastructure Software segment and the increasing demand for AI chips, Broadcom is strategically positioning itself in the technology industry, exploring possibilities for partnerships and collaborations with other tech companies to expand its reach.
- The remarkable growth of Broadcom's AI-related revenues opens up the possibility for investments in innovative projects, setting a foundation for future progress in the field of finance, money management, and the stock-market, well beyond the target valuation of $2 trillion.
