Broadcom’s Market Potential in AI Accelerators
Broadcom’s (NASDAQ: AVGO) custom AI accelerators are positioned as a strong alternative to traditional GPUs, with management projecting substantial growth potential over the upcoming years. The company anticipates a serviceable addressable market between $60 billion and $90 billion by 2027, largely driven by contracts with three major customers and an additional four in development.
Currently, Broadcom holds a market capitalization of approximately $1.4 trillion, making it the seventh-largest company on a U.S. exchange. Despite a robust growth outlook, the stock trades at over 45 times forward earnings, which is higher than Nvidia’s 42 times. Broadcom’s revenues were reported at just shy of $60 billion in the trailing twelve months, with $4.1 billion from AI in Q1, raising questions about the stock’s valuation compared to Nvidia, which recently saw a 69% revenue increase versus Broadcom’s 20%.
