Title: Uncovering the Surprising Stock That Skyrocketed an Incredible 10,610% in 15 Years, Eyeing the $1 Trillion Club by 2025
In the last two decades, tech issues have taken center stage, leading the list of the world's most valuable companies. A stark contrast to 20 years ago when giants like General Electric and ExxonMobile held the title, with market caps of $319 billion and $283 billion respectively.
Today, tech behemoths reign supreme. Apple, Nvidia, and Microsoft are each worth more than $3 trillion and have held top spots at some point in 2024. The tech elite club, comprising members worth over $1 trillion, includes the familiar names of Amazon, Alphabet, and Meta Platforms, with valuations between $1.5 trillion and $2.3 trillion.
Broadcom, currently valued at approximately $797 billion (as per this writing), appears to be a strong contender for this exclusive group. The company's extensive reach, supplying critical components for data center infrastructure, makes it a crucial part of the AI ecosystem, where most processing occurs. Its indispensable technology could be the engine powering Broadcom's journey towards this elite club.
Chip and Dip
As a leading custom chipmaker, Broadcom also offers a wide array of complementary products and services in the mobile, cable, broadband, and data center segments. With 99% of internet traffic passing through some form of Broadcom technology, the company's influence in the AI ecosystem is undeniable.
Beyond AI, Broadcom's acquisition of VMWare late last year continues to generate interest. During the recent earnings call, Broadcom reported accelerating bookings for VMWare, amounting to $2.5 billion in Q3 and a 32% sequential increase. VMWare spending is continually being reduced, and by 2025, Broadcom aims to deliver an adjusted EBITDA of $8.5 billion, while expanding margins and boosting profits once the process is completed.
Broadcom's third-quarter performance was impressive, with revenue expanding 47% year over year to $13.1 billion, and earnings per share (EPS) up 18% to $1.24. Management has raised its full-year revenue forecast to $51.5 billion, representing 44% growth.
The Broad Way to $1 Trillion
Broadcom's critical role in supplying the AI ecosystem will play a significant role in its future growth. With chips and ancillary products essential to data center operations, Broadcom finds itself in a powerful position.
If Broadcom can maintain a forward price-to-sales (P/S) ratio of 15, it would need to generate $65 billion in annual sales to support a $1 trillion market cap. If the company can continue to hit Wall Street's conservative growth estimates of 44% in 2024 and 17% in 2025, a $1 trillion market cap could be achieved as early as mid-2026.
However, Broadcom remains attractively priced, currently trading at 27 times forward earnings compared to a multiple of 30 for the S&P 500. With total returns (including dividends) surging by 14,500% since 2009, Broadcom stock is a compelling buy.
Factors such as technological advancements, cloud computing, expansion of consumer electronics, AI and HPC, market trends, and investor sentiment have contributed to the shift in market leadership from traditional industrial giants to tech titans. Broadcom appears to be well-positioned to continue this trend.
Given the context, here are two sentences that contain the words 'finance', 'money', and 'investing':
Broadcom's acquisition of VMWare and its strategic plans have generated interest among investors, potentially leading to significant financial gains if the company manages to meet its targets and achieve a $1 trillion market cap. In the process of reaching this milestone, Broadcom is actively investing in technologies like AI and HPC, which are expected to drive its future financial growth.
