This AI Chipmaker Looks Like a Bargain With AI Revenue Set to Double Again Next Year

Broadcom expects its AI semiconductor revenue to double in fiscal 2027 and double again in fiscal 2028, according to company guidance. The ASIC chip designer reported 48% overall revenue growth and 88% net income growth in its second quarter of fiscal 2026, yet AVGO shares have trailed the S&P 500 despite the strong fundamentals.

The stock currently trades at a forward price-to-earnings ratio of 19x, a valuation the company's management and analysts view as disconnected from its accelerating AI chip business. Broadcom designs application-specific integrated circuits for hyperscale data center customers, positioning it to capitalize on surging demand for custom AI infrastructure.

The disconnect between AVGO's growth trajectory and its multiple creates a potential entry point. While broader semiconductor names have commanded premium valuations amid the AI buildout, Broadcom's forward earnings multiple sits well below historical tech growth stock averages. The company's forecast calls for its AI revenue to quadruple over the next two fiscal years from current levels.