Prediction: This Artificial Intelligence (AI) Semiconductor Stock Will Join Nvidia, Microsoft, Apple, Alphabet, and Amazon in the $2 Trillion Club by 2028. (Hint: Not Broadcom)

Sat, Aug 30, 2025, 11:05 AM 5 min read

• Chipmakers like Nvidia and Broadcom have seen sales soar as big tech builds out more data centers.

• Broadcom is growing AI revenue quickly, but its business includes more than AI chips.

• Another big company has a more attractive stock price with just as much growth potential.

• 10 stocks we like better than Broadcom ›

Big tech companies are set to spend $375 billion on artificial intelligence (AI) infrastructure this year, according to estimates from analysts at UBS. That number will climb to $500 billion next year.

The biggest expense item in building out AI data centers is semiconductors. Nvidia (NASDAQ: NVDA) has been by far the biggest beneficiary of that spend so far. Its GPUs offer best-in-class capabilities for general AI training and inference. Other AI accelerator chipmakers have also seen strong sales growth, including Broadcom (NASDAQ: AVGO), which makes custom AI chips as well as networking chips, which ensure data moves efficiently from one server to another, keeping downtime to a minimum.

Broadcom's stock price has increased more than fivefold since the start of 2023, and the company now sports a market cap of $1.4 trillion. Another year of spectacular growth could easily place it in the $2 trillion club. But another semiconductor stock looks like a more likely candidate to reach that vaunted level, joining Nvidia and the four other members of the club by 2028.

Broadcom is a massive company with operations spanning hardware and software, but its AI chips business is currently steering the ship.

To that end, AI revenue climbed 46% year over year last quarter to reach $4.4 billion. Management expects the current quarter to produce $5.1 billion in AI semiconductor revenue, accelerating growth to roughly 60%. AI-related revenue now accounts for roughly 30% of Broadcom's sales, and that's set to keep climbing over the next few years.

Broadcom's acquisition of VMware last year is another growth driver. The software company is now fully integrated into Broadcom's larger operations, and it's seen strong success in upselling customers to the VMware Cloud Foundation, enabling enterprises to run their own private clouds. Over 87% of its customers have transitioned to the new subscription, resulting in double-digit growth in annual recurring revenue.

But Broadcom shares are extremely expensive. The stock garners a forward P/E ratio of 45. While its AI chip sales are growing quickly and it's seeing strong margin improvement from VMware, it's important not to lose sight of how broad a company Broadcom is. Despite the stellar growth in those two businesses, the company is still only growing its top line at about 20% year over year. Investors should expect only incremental margin improvements going forward as it scales the AI accelerator business. That means the business is set up for strong earnings growth, but not enough to justify its 45 times earnings multiple.