Broadcom (NASDAQ: AVGO) is proving to be one of the biggest beneficiaries of the artificial intelligence (AI) revolution. Yet the scale of its opportunity may still be underappreciated, especially as AI spending is shifting from experimentation to real-time deployments.
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The company’s revenue was up 29% year over year to $19.3 billion, while GAAP net income soared 34% to around $7.3 billion in its fiscal 2026’s first quarter (ended Feb. 1). However, AI semiconductor revenue, which includes sales of custom AI chips and networking components, surged 106% to $8.4 billion. Management now expects AI chip revenue alone to exceed $100 billion in 2027.
With such exceptional business momentum, the one reason Broadcom can realistically reach a $3 trillion valuation sooner than expected is its deep and expanding role in AI infrastructure.
Broadcom has entered multi-year partnerships with six strategic customers to co-develop custom AI accelerators (XPUs). These engagements have clear roadmaps, with deployments scaling to gigawatts of compute capacity. Management has already secured supply chains through 2028. Its custom AI chips are increasingly used for both training and inference (real-time deployment) of AI models.
AI networking has also emerged as a prominent growth engine. In the first quarter, AI networking revenue was up 60% year over year and accounted for one-third of the company’s total AI revenue. Broadcom expects it to account for nearly 40% of its AI revenue in the second quarter.
Analysts expect Broadcom’s revenue to be around $104.7 billion in fiscal 2026 (ending Nov. 2) and $155.6 billion in 2027.
Shares currently trade at 22 times sales, which is steep. If the price-to-sales ratio simply reverts to its three-year median of 18.8 by the end of fiscal 2027, the valuation can reach $2.9 trillion. This is very close to $3 trillion, even after assuming compression of the valuation multiple.
Hence, considering Broadcom’s unusually strong revenue visibility, the stock can realistically reach a valuation close to $3 trillion in the next couple of years.
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