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Broadcom Inc. (NASDAQ:AVGO) is the latest addition to the elite trillion-dollar companies club. The announcement that the company could generate revenues in the upward of $60 to $90 billion from artificial intelligence by 2027 underscores why it remains the center of attention on Wall Street. The stock is up by more than 30% over the past month as investors react to AI revenue growing from just $3 billion to over $12 billion in one year.
The upward momentum is all but starting, as guidance indicates Broadcom's (NASDAQ:AVGO) will be the biggest beneficiary as tech giants seek cheap alternatives away from Nvidia’s expensive processors. Analysts at Bank of America are already calling Broadcom a surging AI opportunity for a good reason.
While Broadcom (NASDAQ:AVGO) is a surging AI name, Alex Coffey, manager of trading services at Charles Schwab, does not believe it is still an AI opportunity after moving more than 30%. The analyst insists that most of the analysts touting the company as an opportunity have been sleeping on the wheel as the company has always been a winner.
According to Coffey, Broadcom is transitioning from a “value consistent” company to a hyper-growth potential name that requires a new multiple.
“This has clearly been one of the winners of AI this whole time. It was a bit of a stealth mover. It was in the background a little bit more, and I think now what you are seeing, is it has come to the surface very publicly in terms of forcing the acknowledgement that it is a winner, said Coffey in an interview with Schwab Network.
While Broadcom (NASDAQ:AVGO) has always been a winner in the semiconductor space, it’s only now that it is starting to see an astronomical swelling of growth figures. That was evident in its fiscal fourth quarter, as revenues increased 51% year over year to $14.05 billion, and full-year revenue increased 44% to $51 billion. In contrast, the company’s revenue was up by just 4% in the fourth quarter of fiscal 2023. Fourth-quarter results affirm Broadcom's transition from a value investment to a high-growth play with tremendous upside potential.
A scientist at a computer station, surrounded by a neural network of artificial intelligence code.
The robust growth stems from Broadcom (NASDAQ:AVGO) boasting a stable core business that revolves around the sale of chips. While the company has always relied on Apple to sell its chips, its generative AI chips attract interest from Meta Platforms Amazon, Microsoft, and Alibaba.
Likewise, Broadcom (NASDAQ:AVGO) is increasingly diversifying its revenue base beyond hardware sales. Its $69 billion VMware acquisition is strengthening its prospects on the software side of the business. A successful integration of VMware was the catalyst behind the company delivering $21.5 billion in software revenue, accounting for 44% of total revenue in 2024.