Prediction: Broadcom Stock Could Surge by 100% in the Next 3 Years

10 hours ago 4

Geoffrey Seiler, The Motley Fool

Sun, Apr 27, 2025, 3:25 PM 6 min read

When looking astatine stocks with immoderate of the strongest upside imaginable implicit the adjacent fewer years, Broadcom (NASDAQ: AVGO) tops the list. The chipmaker has been caught successful the caller marketplace sell-off, down astir 20% successful 2025 arsenic of this writing. However, the banal is inactive up much than 45% implicit the past year.

Let's look astatine wherefore Broadcom's banal could double, oregon more, implicit the adjacent 3 years.

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Broadcom operates successful 2 segments: semiconductor solutions and infrastructure software.

Originally focused solely connected hardware, the institution entered the bundle concern done assorted acquisitions implicit the past fewer years, including CA Technologies, Symantec, and astir precocious VMware. With CA Technologies, the institution acquired a ample portfolio of mainframe and endeavor bundle solutions, portion Symantec brought it an endeavor information business.

It biggest acquisition, though, was VMware, which it acquired successful November 2023 for $69 billion. VMWare is simply a marketplace person successful virtualization and unreality computing solutions. Its halfway virtualization merchandise allows aggregate virtual machines to beryllium tally connected a azygous server, helping prevention customers costs. Meanwhile, its VMware Cloud Foundation (VCF) level helps customers physique hybrid and multicloud environments wherever they tin negociate workloads crossed nationalist clouds and their ain on-premise information centers.

Broadcom has acceptable retired to alteration VMware by streamlining its operations and merchandise solutions, portion transitioning customers from perpetual licenses to a subscription model. At the extremity of its fiscal archetypal quarter, it had transitioned 60% of its customers to a subscription model. In the process, it has besides been upselling customers from its compute virtualization product, vSphere, to its VCF platform.

As a result, Broadcom's infrastructure bundle gross climbed 47% to $6.7 cardinal past 4th and it forecast the conception to turn by 23% successful fiscal Q2. Its bundle businesses should beryllium a coagulated contributor moving forward, particularly arsenic endeavor customers commencement to crook to hybrid unreality environments to tally artificial quality (AI) workloads.

On the hardware side, Broadcom makes components for assorted markets, including wireless devices, broadband internet, and automotive. However, its 2 astir important businesses are networking and ASICs (application-specific integrated circuits).

Within its networking business, Broadcom makes components specified arsenic ethernet switches, optical receivers, integer awesome processors (DSPs), and web interface cards (NICs). These components are captious parts of AI infrastructure.