Prediction: A $5,000 Investment in Broadcom Could Be Worth This Much by Late-2028
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Broadcom (NASDAQ: AVGO) has been on fire over the past two years. Given the company’s 70.86% annualized return over this period (as of writing), a $5,000 investment in mid-2024 would be worth about $14,597 today. That’s impressive. But can Broadcom keep the party going? Let’s find out how much a $5,000 investment in the company might be worth in about two years.
What’s driving Broadcom’s performance?
Broadcom designs application-specific integrated circuits (ASICs), or custom chips tailor-made to handle specific workloads. It is also an infrastructure software specialist, a business that generates high-margin recurring revenue through subscription-based licenses. Naturally, the company’s semiconductor business has been the main growth driver in recent quarters. Broadcom’s AI chip business is booming as the company partners with hyperscalers to design their AI chips. The list includes Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) and Meta Platforms (NASDAQ: META).
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Broadcom is posting excellent financial results thanks to its work in this area. In the second quarter of its fiscal year 2026, ended on May 3, the company’s revenue increased by 48% year over year to $22.2 billion. AI semiconductor revenue was $10.8 billion, a whopping 143% higher than the year-ago period. Broadcom’s adjusted earnings per share (EPS) were $2.44, 54% higher than the prior-year quarter, and free cash flow totaled $10.3 billion, up 60% year over year. Broadcom projected that its AI chip business will grow even faster — by more than 200% — in its upcoming third quarter.
The bull case for Broadcom
Broadcom is currently trading at 20.8x forward earnings, versus an average of 20x for information technology stocks. That seems like a bargain for a company growing its earnings as quickly as it is, especially since it could maintain that pace over the next few years. Custom AI chips are increasingly popular because they are well-suited to handle certain workloads, can outperform comparable GPUs (Graphics Processing Units) in price-performance, and help corporations reduce costs when deployed at scale.
That’s why Broadcom has signed several long-term deals, including one with Meta Platforms that will last until 2029 and another with Alphabet through 2031. So, the company could see sustained demand for its products through 2028 (and perhaps beyond). Analysts estimate that Broadcom’s EPS will grow by about 67.6% in its next fiscal year (which should end in early November 2027).
