Here's What $10,000 Invested in Broadcom Will Be Worth by 2028

When pondering AI chipmakers, many might initially consider Nvidia or AMD. However, one competitor often overlooked is Broadcom (AVGO -4.53%). This is due to Broadcom's exclusive focus on crafting computing units for large entities, rather than individual consumers. Despite this niche, the potential for growth is remarkable, making Broadcom a potentially wise investment for anyone with $10,000 to spare.

By the end of 2028, that initial $10,000 could potentially grow to $20,000. While Nvidia and AMD produce graphics processing units (GPUs), which excel at handling diverse computationally intensive tasks, Broadcom provides specialized computing chips tailored to specific workloads. This precision helps AI hyperscalers maximize their computing potential at a lower cost compared to GPUs.

Broadcom collaborates with prominent clients like Alphabet (GOOG -2.32%) (GOOGL -2.47%), Meta Platforms, Anthropic, and OpenAI. Among these, Alphabet has demonstrated the most success with its Tensor Processing Unit (TPU). Initially, TPUs were leased to Google Cloud clients but are now being sold directly to external customers. Projected AI semiconductor revenue for Broadcom stands at $57.6 billion this year, expected to surge to $115 billion next year, and a whopping $230 billion by 2028.

While Broadcom's non-AI businesses generate approximately $106 billion in revenue this year, a 10% growth rate in 2027 and 2028 could result in $58 billion. Altogether, this could total around $288 billion in revenue by 2028. With a 40% profit margin, this translates to an estimated $115 billion in profit. Assigning Broadcom a 30 times earnings ratio implies a company worth $3.45 trillion, currently valued at $1.65 trillion.

Consequently, a $10,000 investment in Broadcom today could potentially amount to $20,000 by the end of 2028 based on these projections.