Did you know that in just the past five years, Broadcom (NASDAQ:AVGO) has generated returns of more than 700% for its shareholders? But that only tells part of the impressive growth story of this tech company, whose market cap is a mammoth $1.8 trillion right now. Broadcom has consistently beaten the market in 12 of the previous 13 years -- the only blemish being 2019, when its gains of 24% weren't enough to outperform the S&P 500, which was up by nearly 29% that year.
And while the stock has dipped recently, it could beat the market again in 2026. Here's why it's been such a terrific growth stock, and why it can continue to be a good buy in the long run. This Rare Signal Is Flashing Again.
In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue » Hyperscalers are companies with vast data networks and cloud computing capabilities that have massive needs for computing power.
These are the types of businesses with which Broadcom has closer partnerships, including leading tech giants such as Amazon, Alphabet, and Microsoft. As these companies have been investing in opportunities related to artificial intelligence (AI) in recent years, Broadcom has been in a prime position to capitalize. The tech stock has performed exceptionally well over the past couple of years, particularly as tech capex has risen.
CEO Hock Tan previously told analysts that revenue from the company's AI chips could top $100 billion next year, underlining just how massive the growth opportunity is for the custom chipmaker. Its application-specific integrated circuits (ASICs) can help companies diversify beyond Nvidia's more generic options, while potentially reducing costs. Broadcom has been growing rapidly, with revenue rising 48% in its most recent quarter, an acceleration compared to previous periods.
And with more growth one the way, it's little wonder why the stock has been so highly regarded over the years, and why its stellar performance may continue amid the build-out in tech. AVGO Revenue (Quarterly YoY Growth) data by YCharts For growth investors, what's especially encouraging is that Broadcom is growing not only its revenue but also its bottom line, a good sign that the business is generating strong margins along the way. That helps bring its valuation down, making it a more attractive option for investors.
Extract — continue reading at the source.
